Chilean retailers benefit from a surge in Argentine tourism fueled by favorable currency conditions and relaxed spending restrictions. Companies like Falabella and Cencosud report significantly increased sales, contributing to rising stock performance. The improving Argentine economy also suggests continued advantages for these firms as consumer sentiment strengthens.
Chilean retailers and airlines are experiencing significant earnings growth due to an influx of Argentine tourists, largely influenced by President Javier Milei’s policies that have bolstered the Argentine peso’s purchasing power abroad. Notable companies benefiting include Falabella SA, Cencosud SA, and Latam Airlines Group SA, which saw increased sales as Argentine shoppers traveled to Chile for goods, ranging from appliances to clothing.
Over 2 million Argentines visited Chile last year, marking a 73% increase and the highest number since 2018, with January alone witnessing over 500,000 crossings. Marisol Fernández, Cencosud’s chief sustainability officer, noted that tourism contributes significantly to shopping center revenue, accounting for 30% in some border areas. Furthermore, Falabella’s same-store sales surged by 21% in the fourth quarter, while Cencosud reported a revenue increase of 5.4%, and Latam Airlines posted a 4.4% rise.
Stock performance has mirrored this positive trend, with Falabella’s shares rising 58% over the past year and Cencosud up 50%. The decline of the Argentine peso, down over 20% in formal and informal markets, is contrasted by an 84% rise in consumer prices, driving more Argentines to shop across the border. The Milei administration has eased restrictions on spending abroad, incentivizing purchases in Chile.
As the summer season approaches, Cencosud and Falabella anticipate continued high tourist numbers. Francisco Irarrázaval, Falabella’s retail unit CEO, expressed confidence in ongoing growth into 2025. Despite the seasonal tourism downturn, local companies may benefit from an anticipated recovery in the Argentine economy, which could improve local cash flow and purchasing ability.
Solid prospects are anticipated as consumer sentiment improves alongside expectations of economic recovery in Argentina. Analysts at Citi noted that lifting capital controls could enhance operations in Argentina for Chilean firms like Cencosud and Falabella, presenting significant growth opportunities as the economy rebounds.
The surge in Argentine tourists is notably boosting the earnings of Chilean retailers and airlines, driven by favorable currency exchange dynamics and relaxed restrictions on spending. As companies like Falabella and Cencosud report increased revenue, the positive impact on stock performance reflects strong consumer behavior. Looking ahead, the expected recovery in Argentina’s economy could further enhance prospects for these companies and sustain tourism-driven growth in the region.
Original Source: www.batimes.com.ar
