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Sotheby’s Reports Standard Q1 Loss, with Lower Volume, Higher Commission Margin

Sotheby’s New York.

SHUTTERSTOCK/RBLFMR

This morning, Sotheby’s hosted its first quarterly earnings call of 2019, reporting a net loss of $7.1 million, or $.15 per share.

The first quarter is traditionally a slow one for the house, as its biggest auctions are confined to the second and fourth quarters, and the loss was roughly in line with last year’s $6.5 million Q1 loss, which came to $.12 per share. Investors seemed to be pleased with the results: Sotheby’s stock was up about 3.6 percent by mid-morning.

Sotheby’s noted that its commission margin on auction lots rose to 18.2 percent from 17.3 percent during the same period the year prior, thanks to lower-priced lots (for which it takes a higher-percentage cut that more valuable items). However, total sales value was down, in part because certain Hong Kong auctions that had previously occurred in the first quarter were shifted to Q2.

That’s not to say that the January–March was without notable action. Sotheby’s Masters Week, which focuses on Old Masters, brought in about $100 million, a higher figure than the past eight years, and London sales of Impressionist, modern, and contemporary works brought in $287.6 million.

Sotheby’s CEO and president, Tad Smith, who led the call, said, “We were very pleased that strong demand and sell-through rates overcame a slightly lower supply picture in the first quarter.

In the middle of the month, the New York house hosted Asia Week, which grossed $45.7 million, about 42 percent lower than the same event in 2018. Smith attributed the drop to a “number of single-owner consignments that were not repeated this spring.”

This week, Sotheby’s opens its redesigned galleries at its New York headquarters ahead of its big-ticket sales of modern and contemporary art later this month. The renovations saw added 20,000 square in exhibition space.

“In short,” Smith said, “good quarter, good indications about things to follow, and we are on track.”

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