Sotheby’s Reports Strong Second-quarter Despite Market Turmoil
Sotheby's has made it out of the second quarter with a profit! It reported second-quarter net income, which amounted to $88.6 million. This is up compared to the $73.1 million recorded in the same quarter last year. It is a 21 percent increase. The art market remains in turmoil with Brexit fluctuations not yet accounted for in the year-end predictions. "There are a number of geopolitical macroeconomic commodity pricing and financial market uncertainties to leave the art market with a paradox," said Thomas Smith, Sotheby's CEO, during the earnings call. In May, Sotheby's sold impressionist and modern art worth $144.5 million at its auction in New York, down 61% from a year ago and the lowest since 2009.
Sotheby's said in its earnings statement. "reflecting a comparable decline in the global art market,” "There are a number of geopolitical macroeconomic commodity pricing and financial market uncertainties to leave the art market with a paradox," said Thomas Smith, Sotheby's CEO, during the earnings call. "On the one hand, collectors are still buying top quality works of art in well-curated sales. On the other hand, consignors who have the luxury of discretion are showing a bit of reluctance to sell their work at this time. This paradox has led to lower overall sales volume this year, down some 30% in to-date," he said.
Smith offered examples of recent London art sales, which resulted in high sell-through rates, where 85 percent of lots offered sold plus a record-setting jewelry sale in Geneva in May. The auction house also pointed out its successes in Asia, where sales continue to grow. Hong Kong sales are up 22 percent over the prior year, Smith reported, and the number of Asian clients buying Western art at Sotheby’s increased by 12 percent in the first half of 2016.
Online sales, totalling $90 million in the first half, up just over a quarter of the previous year. Moreover, the number of lots sold online has grown by more than half, he said. Smith also noted recent staff additions, including Gagosian staffer Candy Coleman and Andy Warhol Museum director Eric Shiner, both of whom will work in private sales. Those sales return higher margins as they don’t require the production costs of major auctions.
Sotheby’s stock (BID) has dropped 3.25 percent over the last year, from $38.72 to $37.46 per share.