Sotheby's reports $11.3m loss but praises ‘non-auction growth’ in first quarter earnings call

Tad Smith spun a positive outlook based on proposed tax cuts and a new view of the auction house as a “media company”, pointing to increased web traffic


On the company's first quarter earnings call Wednesday morning, Sotheby's CEO Tad Smith spun a chipper outlook for his company, despite a $11.3m loss in that time period.

Smith noted that the shortfall was smaller than the $14.6m for the same period last year and emphasised the company's “non-auction growth”—such as in its advisory wing, spearheaded by Art Agency, Partners, which the company purchased in 2016 for $50m, and in its in-house S|2 gallery. He also pointed to many good things coming in the future for the company, among them an uptick in traffic to the company’s website and the Trump administration’s proposed tax cuts. “Sotheby’s investors should be pleased with the possibility of a reduced US corporate tax rate, a possible tax holiday on US repatriation of cash, lower capital gains tax rates, especially if it would apply to art and collectibles, potential reform of the inheritance tax,” Smith said.

“The truth is that, over the past two years, Sotheby’s has become a powerful media company, with the ability to bring its scale and scope to bear to help our clients sell something, buy something, promote something, market something, or enjoy something,” he added. As evidence of this he pointed to increased visits to the company’s e-catalogues.

And despite the company’s $217m in guarantees for the auctions next week, Smith said he “feel[s] good about the market for art and luxury goods,” citing a 2016 Forbes report about the rich getting richer.

The first quarter is historically a weak one for Sotheby’s, since around 80% of its net auctions sales come in during the rest of the year, in quarters two through four. The auction house has also had to deal with aggressive moves by shareholders, such as the China-based Taikang Life Insurance, which bought a 13.5% stake in the company last July, and a major talent drain in recent years, including the loss of Henry Wyndham, Melanie Clore, and Cheyenne Westphal.