Surge in Argentine Tourists Boosts Chilean Retail and Airline Earnings

Chilean retailers and airlines are experiencing a substantial increase in earnings, largely due to a surge in Argentine tourists motivated by a weakened peso. Key players like Falabella and Cencosud reported significant sales increases in the fourth quarter, with expectations of ongoing growth as the Argentine economy recovers. Analysts predict continued benefits for Chilean firms as tourist numbers rise and consumer sentiment improves.

The recent surge in Argentine tourists has significantly benefited Chilean retailers and airlines, particularly in the fourth quarter of 2023. The depreciation of the Argentine peso has encouraged many shoppers to cross the border into Chile, where they have increased their purchases of various goods such as home appliances and clothing.

Key players in this growth, including Falabella SA, Cencosud SA, and Latam Airlines Group SA, reported an increase in sales attributed to the influx of Argentine shoppers. Approximately 2 million Argentine tourists visited Chile last year, representing a 73% increase from 2022, the highest figure since 2018. Just in January, over 500,000 Argentines crossed the border, marking a 152% rise from the previous year.

According to Marisol Fernández, chief sustainability officer and head of investor relations at Cencosud, “Thirty percent of total revenue is coming from tourism in the shopping centres that border Argentina.” Falabella’s retail unit reported a remarkable 21% rise in same-store sales during the fourth quarter, while Cencosud’s Chilean operations experienced a 5.4% revenue increase and Latam Airlines grew by 4.4%.

The stock prices of these companies have reflected this surge in sales, with Falabella’s shares increasing by 58%, Cencosud’s by 50%, and Latam Airlines by 30% over the past year. Retailer Ripley, which is set to announce earnings soon, may also report positive trends similar to its peers.

The Argentine peso has depreciated more than 20% in formal and blue chip markets in the past year, well below the inflation rate of 84%. The Milei administration has loosened restrictions on foreign credit card expenses, enabling more Argentines to spend abroad.

In 2025, there are expectations for a continued increase in Argentine tourists, especially as summer approaches in the Southern Hemisphere. Francisco Irarrázaval, CEO of Falabella’s retail unit, stated, “We expect that to remain in the short term.” This trend suggests that even as seasonal visitors return home, Chilean businesses may still reap benefits amid Argentina’s economic recovery, putting more disposable income in Argentines’ hands.

Latam Airlines CEO Roberto Alvo remarked, “Argentines love to travel.” Additionally, Chilean companies with operations in Argentina, such as Cencosud, Falabella, and Embotelladora Andina, stand to gain from an improving local economy. Analysts from Citi noted that a positive shift in consumer sentiment, potential lifting of capital controls, and anticipated earnings from operations in Argentina could lead to significant benefits for Chilean firms.

The influx of Argentine tourists has had a profound impact on Chilean retail and airline industries, notably increasing sales and stock values of key companies. Efforts by the Argentine government to stabilize the peso and relax spending restrictions have further fueled this trend. As consumer sentiment improves and the Argentine economy stabilizes, prospects for continued growth in these sectors appear promising. Overall, this development not only highlights the interconnectedness of regional economies but also emphasizes the resilience of local businesses amidst fluctuations in consumer behavior.

Original Source: www.batimes.com.ar