Sotheby’s banks on its galleries
Bill Ruprecht says auction house’s plan to open another private gallery space in London this autumn will help to boost earnings significantly over time
By Melanie Gerlis. From Frieze New York daily edition
Published online: 11 May 2013
The chairman and chief executive of Sotheby’s, Bill Ruprecht, has said that the auction house’s plan to open another private gallery space in London this autumn will help to boost earnings significantly over time. Describing the success of similar ventures in New York and Hong Kong, Ruprecht said that Sotheby’s was “substantially more” than an auction house—a phrase that could send chills down the spines of commercial dealers.
Ruprecht was responding to questions during Sotheby’s earnings conference call on Thursday, when Wall Street analysts expressed concern about the “anomaly” first-quarter results announced by the auction house. These showed a net loss of $22.3m. Although the first quarter is traditionally loss-making for Sotheby’s, this is worse than last year’s loss of $10.7m.
At issue is a recurring problem: sales are increasing most in the high-end Impressionist, Modern and contemporary fields (witness this week’s $288m sales total for Sotheby’s in New York), but this is where the competition for consignments is at its highest and where Sotheby’s profits, in the form of trading commissions, are at their lowest. Profit margins were down to 15% from 18.1% in the equivalent quarter last year.
Ruprecht said that he expects the increased buyer’s premium rate structure, which came into effect on 15 March, to help improve margins, adding that this did not seem to have pushed back demand. He was also asked about expenses, up 13% on the previous year due to “strategic” initiatives such as opening in China. He said that 40% of demand for works was now coming from outside traditional Western markets.
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