In its quarterly earnings call to investors early this morning, Sotheby’s announced a net loss of $54.5m for the three months ending on 30 September 2016, its worst third quarter in many difficult years, compared to losses of $17.9m for the same period last year and $27.7m for 2014. “As we communicated previously, the third quarter results were not expected to be good,” said Tad Smith, Sotheby’s president and chief executive officer.
The company’s stock opened at $35.15 per share, compared to $35.08 on Monday, 9 November 2015. US stocks across the board were up following the news that Hillary Clinton’s emails would not be subject to prosecution by the FBI.
The continuing slump follows the loss of a number of high-profile staff this past year, including longtime veterans David Norman, the former vice chairman of the Americas, and Alex Rotter, the former co-head of the contemporary art department. This, and other factors, has led to talks of a potential takeover by Chen Dongsheng, the Chinese insurer and grandson-in-law of Mao Zedong, who has acquired the largest single-holder stake in the company in recent months at 13.5%.
During the call, Smith announced an addition to the Sotheby’s board, Linus Cheung, a Hong Kong Telecom executive who, Smith said, “hails from a crucial part of our world, Greater China, that will be the foundation of a bright future for Sotheby’s.”
The auction house says it is doing its best to increase its value, and recently followed Christie’s lead by raising buyer’s premiums. Late last month, the house purchased the Mei Moses Art Indices, a tracker of art value.
“Excluding last year’s summer contemporary sale in London, which took place in the third quarter of 2015, the operational statistics for this third quarter compared to the prior periods give some cause for optimism,” Smith said. The auction house added that it was seeing growth in the low and middle market, driven by online buying. Hammer sales were only down 8% for the third quarter, and buyer and bidder numbers were up 33%.
The overall outlook for the rest of the year was less sunny. “We believe that when one excludes the $383m single-owner Taubman sale [from last year],” said Mike Goss, the chief financial officer, “we will likely see a lower sales level in the fourth quarter consistent with the trends we’ve seen during the past six and nine month periods of down 22% and 26%, respectively.”