On Nov. 7, Sotheby’s reported a third-quarter net loss of $46.2 million, or 71 cents a share, greater than its year-ago third-quarter loss of $20.9 million, or 33 cents a share.
NEW YORK—On Nov. 7, Sotheby’s reported a third-quarter net loss of $46.2 million, or 71 cents a share, greater than its year-ago third-quarter loss of $20.9 million, or 33 cents a share. Sotheby’s said the results were “largely due to a higher level of principal losses on auction guarantees.” The house’s overall loss on guarantees for property sold in the fourth quarter was $53.2 million, though most of this was recorded in the third quarter. The sum includes $15 million for October’s sales of contemporary art in Hong Kong and London, $10 million for the New York Impressionist and modern sales, and an anticipated $17.6 million for the New York contemporary sales.
A Sotheby’s statement said the losses were recorded in the third quarter, as opposed to the fourth quarter when the sales actually took place, because the guarantee obligations were outstanding as of Sept. 30 and “the losses were judged to be probable as of that date.”
On Nov. 14, following its contemporary auctions, Sotheby’s made an additional filing with the U.S. Securities and Exchange Commission in which it said the company had “incurred approximately $10.6 million of principal losses . . . as a result of certain guaranteed property failing to sell or selling for less than the minimum guaranteed price in Contemporary Art auctions.” The additional $10.6 million pretax loss will be recorded in the fourth quarter’s earnings, according to the filing.
According to the recent earnings report, the house will continue “to substantially reduce its use of auction guarantees until stability is restored in the global financial and economic markets.” Sotheby’s also confirmed it has repaid a recent $250 million loan drawn on a $300 million credit line with Banc of America, an investment-banking subsidiary of Bank of America (ANL, 10/28/08). As ARTnewsletter went to press, Sotheby’s shares were trading at $8.47 on the New York Stock Exchange. The stock has fallen from $35 a share at the start of the year to under $10 in the past month.
Privately-held Christie’s is not required to make detailed financial disclosures. Officials would not comment on the outcome of guarantees related to recent Impressionist and modern and contemporary sales.