Surge in Argentine Tourists Enhances Chilean Retail Earnings

Chilean retailers and airlines are seeing higher earnings due to a surge of Argentine tourists influenced by economic policies of President Javier Milei. As the Argentine peso’s devaluation encourages cross-border shopping, companies such as Falabella and Cencosud report substantial increases in revenue. Analysts predict ongoing benefits as Argentina’s economy recovers, positively impacting businesses with operations in the country.

Chilean retailers and airlines are experiencing a rise in earnings, largely attributed to Argentine President Javier Milei’s economic strategies. The devaluation of the Argentine peso has led many Argentines to travel to Chile for shopping, significantly impacting sales for companies like Falabella, Cencosud, and Latam Airlines. In the past year, more than 2 million Argentines have crossed the border to acquire items ranging from clothing to home goods, marking a 73% increase from 2023 and the highest number since 2018.

Milei’s administration has managed to stabilize the peso’s decline, thereby enhancing the purchasing power of Argentinians when shopping abroad. In January, 500,000 Argentine tourists visited Chile, reflecting a 152% year-over-year increase. Marisol Fernández, Cencosud’s chief sustainability officer, noted that 30% of total revenue in border shopping centers originates from this influx of tourists.

Various companies reported significant boosts in their earnings. Falabella’s retail sales rose by 21% year-over-year in the fourth quarter, while Cencosud’s Chilean operations enjoyed a 5.4% increase in revenue, and Latam Airlines’ revenue grew by 4.4%. Correspondingly, these companies saw their stock values rise, with Falabella’s shares increasing by 58% in the past year.

As the Argentine peso continues to weaken against the backdrop of rising consumer prices, Milei’s administration has eased restrictions on credit card expenses abroad, further facilitating Argentine shoppers’ spending. Francisco Irarrázaval, CEO of Falabella’s retail division, shares the optimistic outlook for 2025, suggesting that tourism from Argentina will remain strong due to the summer season.

As the summer season concludes, Chilean businesses may still reap benefits from an anticipated recovery in Argentina’s economy. Analysts predict that improved consumer sentiment alongside potential capital control loosening could provide a significant upside for companies like Cencosud and Falabella, which have operations in Argentina. According to Citi analysts, these factors combined with a positive outlook for 2025 could foster growth for Chilean firms engaged in the Argentine market.

The surge in Argentine tourists has significantly bolstered the earnings of Chilean retailers and airlines in recent months. With economic strategies from the Milei administration promoting increased shopping, companies like Falabella, Cencosud, and Latam Airlines are positioning themselves for continued revenue growth. Analysts anticipate further benefits as Argentina’s economy rebounds, thereby enhancing the business landscape for these companies operating within the region.

Original Source: www.batimes.com.ar