Sotheby’s shares failed to rally on Wednesday despite the auctioneer reporting a narrower than expected loss and its chief executive saying that the art market “is starting to show signs of strengthening”.

Tad Smith, who was tapped to lead Sotheby’s two years ago after the company attracted a number of activist investors, said that the group had already secured bids for many of the works set for auction at the closely watched contemporary art sales set for next week.

“The worldwide market for art is not perfect, but I would definitely characterise it as starting to show signs of strengthening,” he added.

The comments did little to support Sotheby’s shares, which dipped 0.4 per cent to $47.65 in early trading.

Twenty of the 36 lots Sotheby’s has guaranteed at the auction have irrevocable bids that Mr Smith said “ensure us returns consistent with our profitability
requirements before the sales even begin.”

The upcoming auction is to be led by Jean-Michel Basquiat’s Untitled, 1982, alongside Roy Lichtenstein’s Nude Sunbathing and works from Andy Warhol and Agnes Martin.

The New York-based company said its loss more than halved from a year earlier to $11.3m in the three months to the end of March, or 21 cents a share.

Sales in the seasonally quiet first quarter rose 76 per cent from a year earlier to $187.5m, boosted largely by inventory sales in the period as the company seeks to lift its capital efficiency.

Analysts surveyed by Thomson Reuters had projected a loss of 38 cents a share on sales of $111.7m.

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