Chilean retailers and airlines are benefitting from a substantial increase in Argentine tourists, influenced by the overvalued peso and measures by President Javier Milei. Falabella, Cencosud, and Latam Airlines report increased sales, with tourist-driven revenue proving significant. Over 2 million Argentinians visited Chile in the past year, reflecting a major growth trend, and the prospects for continued economic recovery further support these developments.
Chilean retailers and airlines are experiencing increased earnings due to a significant rise in Argentine tourists, largely influenced by President Javier Milei’s actions regarding the currency. An overvalued Argentine peso is incentivizing shoppers to venture across the border into Chile for consumption. Noteworthy companies such as Falabella SA, Cencosud SA, and Latam Airlines Group SA reported a surge in sales, attributed to this influx of Argentine visitors purchasing various goods from home appliances to clothing.
The recent measures taken by Milei’s administration have successfully limited the decline of the peso in both formal and informal markets, which has, in turn, strengthened the purchasing power of Argentines abroad. Consequently, over 2 million Argentinians traveled to Chile last year, marking a 73% increase compared to 2023 and the highest number since 2018. Specifically, January witnessed over 500,000 Argentine visitors crossing the border, a remarkable increase of 152% from the previous year.
In an earnings call, Marisol Fernández, Chief Sustainability Officer and Head of Investor Relations at Cencosud, stated, “Thirty percent of total revenue is coming from tourism in the shopping centres that border Argentina.” Falabella’s retail unit reported a 21% increase in same-store sales during the fourth quarter, primarily driven by tourist purchases. During the same period, Cencosud’s revenue in Chile increased by 5.4%, while Latam Airlines’ revenue rose by 4.4%.
As a reflection of these positive trends, shares of the companies have also seen gains. Falabella’s stock surged by 58% in the past year, Cencosud rose by 50%, and Latam Airlines saw an increase of 30%. Retailer Ripley is anticipated to report similar revenue trends when it releases its earnings on Wednesday.
The Argentine peso has depreciated over 20% in both formal and informal markets within the last year, contrasting with a staggering 84% rise in consumer prices. Additionally, Milei’s administration has eased restrictions on credit card expenditures in foreign currencies, encouraging spending abroad. Tourists continue to flock to Chile at the start of the new quarter, indicating sustained demand.
Francisco Irarrázaval, CEO of Falabella’s retail unit, commented, “We see a greater impact from Argentines, mainly because we’re in the summer season.” The expectation is that this trend will persist in the short term, even as summer transitions to autumn in the Southern hemisphere. Local businesses may keep benefiting as Argentina’s economy gradually recovers, empowering residents with increased disposable income.
Roberto Alvo, CEO of Latam Airlines, summarized the sentiment: “Argentines love to travel.” Additionally, companies like Cencosud, Falabella, and Embotelladora Andina, which have operations in Argentina, are projected to gain from an economic recovery. Citi analysts, including Carolina Zelaya, noted in a recent report that, “The improved consumer sentiment and perspectives of an economic rebound for 2025… would be a source of upside for Chilean companies with significant operations in Argentina.”
The surge in Argentine tourists, driven by an overvalued peso and supportive measures from President Javier Milei’s administration, has significantly bolstered sales for Chilean retailers and airlines. With over 2 million Argentinians traveling to Chile and projections for continued growth, companies like Falabella, Cencosud, and Latam Airlines are poised for ongoing success. The positive trend reflects not only immediate consumer behavior but also the potential for long-term economic benefits as Argentina’s economy recovers.
Original Source: www.batimes.com.ar
