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May 10, 2013 9:28 pm
Net losses at Sotheby’s more than doubled during the first three months of 2013 despite auction sales rising almost a quarter, with the company blaming fierce competition in the fine-art market and the cost of its emerging markets push.
“It’s a competitive market out there and it will continue to be competitive,” said Marc Riddick, an analyst at Williams Capital. “When Sotheby’s wins share from Christie’s, Christie’s responds aggressively and tends to be successful . . . and you have local players all over the world stepping up.”
The New York-based group, which has offices in 40 countries said that most of the sales increase were in the Impressionist, Modern and Contemporary Art categories.
“Unfortunately, this is also where the commission margins [the fees collected from buyers and sellers] are lower and the competition at its fiercest,” said Anders Petterson of ArtTactic, an art market analysis company.
With Sotheby’s largest auctions commonly held later in the year, first-quarter losses are not unusual.
Art markets, though, have been buoyant and analysts had been expecting much smaller losses. With commission margins falling from 18 per cent to 15 per cent year-on-year, post tax losses rose from $10.7m during the first quarter of 2012 to $22.3m in the first quarter 2013. Revenue fell 3 per cent to $101.7m.
“The first quarter showed a solid increase in auction sales compared to the prior year, but the results illustrate how competitive the market is for the highest value consignments,” chief executive Bill Ruprecht said.
The company also blamed rising costs, which grew 8 per cent year-on-year to reach $123m. Sotheby’s is expanding internationally to reach collectors in emerging markets, which now account for 40 per cent of Sotheby’s auction sales. It entered China in 2012 as the mainland’s first western fine-art auctioneer.
In 2012, Sotheby’s took 46 per cent of the total of its sales combined with Christie’s, compared to 51 per cent in 2011.
On Tuesday the company auctioned $230m of Modern Art and Impressionist items in New York, including a $41m sale of Paul Cézanne’s 19th century oil painting “Les pommes”.
Shares in the company closed up 0.9 per cent at $36.67 in New York on Friday, having increased by about 4 per cent over the past 12 months.
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