NEW YORK—On Feb. 26, Sotheby’s announced a loss for the fourth quarter of 2008 as the economic crisis and failed auction guarantees last fall weighed down its results. Sotheby’s posted operating revenues of $166.2 million, down $179.6 million, or 52 percent, from the fourth quarter of 2007. According to the auction house, the drop was “primarily due to a 46 percent decline in net auction sales from $1.9 billion to $1 billion, significant auction guarantee losses and inventory writedowns” attributed to the downturn in the international art market that began last September.
Sotheby’s officials said the house had a net loss for the fourth quarter of $8.5 million, or 13 cents per diluted share, a sharp drop from the fourth quarter of 2007, when it had net income of $102.4 million, or $1.55 per diluted share. For the full year 2008, Sotheby’s net income was $28.3 million, down $184.9 million, or 87 percent, from 2007.
In a statement, CEO William Ruprecht said, “The global economic crisis which erupted in the autumn of 2008 had a major impact on our business in the fourth quarter.” Ruprecht said that Sotheby’s has taken steps to shore up its business, including cost-cutting measures and drastically reducing the use of guarantees.
Sotheby’s shares fell 5 percent to $6.77 in trading on the New York Stock Exchange the day earnings were announced. As ARTnewsletter went to press, the stock was trading up 50 cents, at $7.69.