Sotheby’s: strong sales and improved commission margins are driving growth

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For the three months ended 31 March 2015, Sotheby’s reported adjusted operating income of $22.2 million, an increase of $12.4 million (127%) over the prior year, according to the auction house’s first quarter 2015 financial results. It said the increase is principally due to an 8% increase in auction commission revenues, attributable to improved auction commission margins, and 3% growth in net auction sales.

Sotheby’s attributed the improvement in auction commission margin to the change in the buyer’s premium rate structure enacted on 1 February 2015 and a lower level of buyer’s premium shared with consignors. The comparison of first quarter adjusted operating income versus the prior year also benefits from the continued growth of Sotheby’s Financial Services loan portfolio, as well as a lower level of professional fees.

It said that the same factors contributed to its first quarter 2015 adjusted net income is $7.4 million, a $10.4 million improvement versus the ($3.0) million adjusted net loss reported in the prior year. Another contributing factor was a $3.1 million income tax charge recorded in the prior year quarter related to the enactment of new legislation in New York State.

Adjusted diluted earnings (loss) per share in the first quarter of 2015 is $0.11 versus $0.04 in the first quarter of 2014.

Including charges associated with the CEO transition, prior year shareholder activism, and restructuring, operating income, net income (loss) attributable to Sotheby’s and diluted earnings (loss) per share are $18.4 million, $5.2 million and $0.07, respectively, for the first quarter of 2015, and $4.1 million, ($6.1) million and ($0.09), respectively, for the first quarter of 2014.

President and chief executive officer said: “Our company delivered significant profit growth in the quarter as compared to last year through strong sales in Old Masters, Impressionist & Modern and Contemporary Art. These successes highlight the depth and breadth of Sotheby’s expertise. We are off to a good start in 2015.”

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