Newspaper article International New York Times

Sotheby's Falls Short of Expectations

Newspaper article International New York Times

Sotheby's Falls Short of Expectations

Article excerpt

The auction house said its second-quarter revenue was down 1 percent from a year earlier, and revenue was depressed.

Sotheby's, the upscale auction house that appointed a new chief executive in March, has reported weaker results than analysts had expected.

Sotheby's said on Friday that its second-quarter revenue was down 1 percent from a year earlier, to $332 million.

Revenue was depressed by a shift in the timing of a big London art auction that occurred in last year's second quarter but was held in this year's third, the auction house said, and by adverse currency movements.

Profit for the quarter was $73.1 million, compared with $87.8 million in the same period last year.

Sotheby's share price closed down 7.5 percent on Friday, at $37.49.

"There is a lot of noise in the quarter, and the results were worse than expected," said Kristine Koerber, a research analyst at Barrington Research, an investment firm.

Sotheby's also suffered a setback, it said, when a painting it had bought this year was resold at auction in the second quarter at a loss of several million dollars.

The loss on the single painting, which was not identified, accounted for most of the $10 million increase in Sotheby's cost of inventory sales in the quarter, it said.

But Sotheby's said that it had sold a second painting as part of the same deal, and that the transaction involving both works had been profitable over all.

Another loss, of nearly $7 million, was caused by "a significant charge related to an unexpected authenticity claim related to property sold several years ago," said Patrick McClymont, the chief financial officer of Sotheby's. The auction house would give no more details about the property or the nature of the claim.

Despite the short-term slowdown, the company's new chief executive, Tad Smith, a businessman with a background in the entertainment, sports and media industries, said that his strategic review of the company would continue and that he looked forward to stronger growth in the future.

Around the world, "overall sales numbers continue to be strong," said Mr. Smith, who most recently led the Madison Square Garden Company. …

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