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Shares of auction house Sotheby’s climbed as much as 12 per cent on Monday, on track for their best day in three months after the group reported stronger-than-expected profits and margins in its fourth quarter.
The group, which ended the New York contemporary auction season on a subdued note in November, said it turned a profit of $65.5m, or $1.20 per share, in the three months to the end of December. That compares to a loss of $11.2m a year earlier.
The results reflect turnaround efforts by the auction house, which has been mirrored at crosstown rival Christie’s. The two brokers have scaled back the size of their auctions, cut staff and reduced the guarantees they offer to encourage sales in a bid to bolster margins.
“These results reflect growing confidence in the market as collectors responded enthusiastically to the great collections and works we secured for sale,” said Tad Smith, chief executive of Sotheby’s. “Even more importantly, the quarter demonstrated that when the market stabilizes, let alone when it returns to its secular growth trajectory, our company is poised to capitalize on the upturn and do very well for our shareholders.”
Revenues in the quarter fell 8.1 per cent to $308.7m* and were 16.2 per cent lower for the full year. Sotheby’s said sales of works tumbled by 27 per cent from a year prior to $4.9bn, reflecting a “softening art market in the first half” of the year.
That was reflected in the closely scrutinised sales in November. On its finale night, the art broker brought the gavel down on $237.4m of work, at the lower end of its $209m to $302m estimate for the night.
*This post has been updated to note that fourth-quarter revenues were $308.7m.