Private sales boost Sotheby’s in tough third quarter
Sotheby’s reported improved results in the third quarter of 2013 compared with the same period a year ago, largely thanks to an $11.3 million, or 77%, increase in private sale commissions and a $6.6 million, or 16%, increase in auction commission revenues.
The company still made a net loss in the quarter, however, of $30.1 million, a 7% improvement on the year before. The business said the third quarter is always a tough period because of the seasonal nature of the art auction market. The quarter represents only 7%-10% of annual auction sales.
The company has seen overall growth this year. For the nine months ended 30 September 2013, net auction sales increased $108.1 million (5%) to $2.4 billion and private sales increased $255.8 million (37%) to nearly $1 billion, generating growth in both auction and private sale commission revenues.
Despite the improved third quarter results and the year-to-date revenue growth, when compared to the first nine months of 2012, pre-tax profits decreased $13.7 million (22%) to $48.8 million. The company said this was principally due to the cost of strategic investments, as well as inflationary pressures across most expense categories.
“Our third quarter results have improved since a year ago, with sizable revenue growth. Private sales, which continues to be an area of focus for Sotheby’s, contributed more than a third of auction and related revenues in the third quarter – a significant shift from just a short time ago,” said Bill Ruprecht, its chief executive officer.
“We’re very pleased to say the fourth quarter is off to a remarkable start. Our Hong Kong sales series brought a record $538 million last month, a 105% increase over the previous year and a clear validation of our strategic investments in this region of the world. Last week, our Impressionist and Modern Art sales in New York achieved $348 million, up 71% and the second-highest series total in this category in the company’s history.”
Since September, Sotheby’s has been actively engaged in a review of its capital allocation and financial policies. The Board of Directors has pledged to share the results of that examination with shareholders in early 2014.
“The financial review we have undertaken goes beyond capital allocation, and includes an in-depth examination of our strategy, business and cost structure,” said Patrick McClymont, Sotheby’s chief financial officer. “We are committed to ensuring that our resources are appropriately allocated to the most attractive opportunities for value creation. To that end, we are taking a close look at both our current businesses and potential growth areas where we can leverage our expertise and brand. The goal of this review is not only to determine the right use of capital going forward, but also to identify new opportunities to drive value for shareholders.”