Chilean retailers and airlines have Argentine President Javier Milei to thank for a boost in fourth-quarter earnings, as an overvalued peso encourages shoppers to come across the border and stock up on goods in Chile.
Falabella SA, Cencosud SA and Latam Airlines Group SA all saw a boost to sales in the last quarter as hundreds of thousands of Argentines crossed the Andes mountains to buy everything from home appliances to clothes.
Milei’s administration has limited the decline in the peso on both the formal and informal markets to slow inflation, boosting the purchasing power of Argentines abroad. That encouraged more than 2 million people to go to Chile last year, up 73% from 2023 and the biggest number since 2018. In January alone, over 500,000 Argentines crossed the border, an increase of 152% from the year prior.
“Thirty percent of total revenue is coming from tourism in the shopping centres that border Argentina,” said Marisol Fernández, Cencosud’s chief sustainability officer and head of investor relations, during the company’ earnings call last week.
Falabella’s retail unit saw same-store sales leap 21% in the fourth quarter from the year earlier on increased purchases by tourists. Over the same period, Cencosud’s Chilean operations posted a 5.4% increase in revenue and Latam Airlines’ revenue gained 4.4%.
Shares have tracked sales higher. Falabella’s stock leaped 58% in the last 12 months, while Cencosud rose 50% and Latam Airlines climbed 30%.
Retailer Ripley, which reports earnings on Wednesday, could also see similar trends in revenue.
The Argentine peso has weakened just over 20% in both the formal and so-called blue chip markets over the past 12 months, way below the 84% jump in consumer prices. At the same time, the Milei administration has made it easier to spend money abroad, removing some of the restrictions on credit card expenses in foreign currencies.
Tourists continued to boost numbers at the start of the first quarter.
“We are observing a 2025 where we see a greater impact from Argentines, mainly because we’re in the summer season,” said Francisco Irarrázaval, the CEO of Falabella’s retail unit, in an earnings call. “We expect that to remain in the short term.”
And even as the summer ends in the Southern hemisphere and holiday makers pack their bags and return from the Chilean coast, local companies could continue to benefit as Argentina’s economy drags itself out of recession, putting more money in the pockets of locals.
“Argentines love to travel,” as Latam Airlines’s CEO Roberto Alvo put it.
What’s more, Cencosud, Falabella, and Embotelladora Andina all have operations in Argentina that will begin to benefit as the economy picks up.
“The improved consumer sentiment and the perspectives of an economic rebound for 2025, together with the possible lifting of capital control (thus allowing companies to transfer dividends abroad), would be a source of upside for Chilean companies with significant operations in Argentina,” Citi analysts, including Carolina Zelaya, wrote in a report last week.
by Carolina Gonzalez, Bloomberg
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