In a quarterly earnings call this morning, Sotheby’s CEO Tad Smith announced that the auction house would report $89 million in net income for the second quarter of 2016, an increase over the same period of 2015 even amid a decrease in net auction sales.
The auction house posted a diluted earnings per share price of $1.52, compared to $0.96 a year ago.
Comparisons between the two years may not be fair: The net increase of $67.6 million during last year’s second quarter was hobbled by a variety of factors that could not have had a similar impact in 2016. For instance, the decision to hold last year’s contemporary evening sale in London during the third quarter dampened sales results, as did a variety of other occurrences: losses on a work that was resold at a low price, penalties from a years-old authentication claim, and high U.S. federal tax rates on foreign earnings due to the repatriation of such earnings for redeployment in the United States.
The shift of last year’s London sale from the second to third quarter also complicates a head-to-head comparison of differing auction results between the two years. While sales from 2016’s second quarter are down just 16 percent compared to last year’s period, when adjusting for the inclusion of the London sale, the difference is a 24 percent decline.
Still, given the decline in sales reported during the earnings call for the first quarter of 2016—a drop off of 35 percent from the year before—a downtick of even 24 percent (coupled with the higher-than-anticipated gains) was spun as a success in an uneasy market.
“There are a number of geopolitical, macroeconomic, commodity pricing, and financial market uncertainties that leave the art market with a paradox,” Smith said 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.”
“However,” Smith added, “when sales are carefully managed and thoughtfully executed, we have many examples of very good sell-through rates and record prices.”
There were no announcements as big as the news late last month that Taikang, the Chinese life insurance company owned by the art collector who founded the auction house China Guardian, would be acquiring a 13.5 percent stake in Sotheby’s, making them the largest shareholders. Smith instead highlighted the growth of online sales, the launch of a video aggregating program called Sotheby’s Museum Network, and a push to integrate with online platforms such as WeChat and Facebook Live.
He also emphasized the importance of private sales, pointing to the new hires from outside the auction world: Eric Shiner, the former director of the Andy Warhol Museum, and Candy Coleman, a former director of Gagosian Gallery’s Beverly Hills outpost.