Sotheby’s released its first-quarter earnings today, with the publicly traded company reporting aggregate auction sales of $667m during the first three months of 2018, a jump of 18% from a year ago. More impressive, however, is a leap of 70% over the year for private sales brokered by the firm, totalling $246.6m for the quarter. The loss per share also improved to $0.12, compared with $0.21 in the prior period.
Aside from the boost from private sales, Sotheby’s pointed to successful spring auctions in Hong Kong, with “excellent” results for wine—“often a leading-edge indicator”, according to chief financial officer Mike Goss; a doubled total of $82.5m for Old Masters in January; a $398.9m take in the Impressionist, Modern, and contemporary sales in London in February/March; and a 49% increase for Asia Week in New York in March, with sales of $78.4m.
“The market tailwinds are continuing”, says Goss. “We’re very much where we expected to be.”
The rise in private sales tracks with Sotheby's hire, in February 2017, of JP Morgan managing director David Schrader to head up private sales of contemporary art (he is now worldwide head of private sales for fine art). According to Amy Cappellazzo, the chair of fine art for the company, the categories driving this wing of the business are contemporary, Impressionist and Modern art, “sourcing two blocks away from where we sell it, sometimes.”
She adds: “It’s a different way of working than an auction, as any dealer will tell you, but we have a lot of people here who are ambidextrous.” Cappellazzo’s boss, Sotheby's chief executive Tad Smith, noted in his call to investors that dealers have found the service especially useful, because of the auction house’s global span and targeted outreach. However, Smith also characterised private sales as “lumpy” from quarter to quarter and less predictable as a revenue stream. Such deals added $744.6m to Sotheby’s coffers in 2017.
Sotheby’s is currently offering some 140 works privately, with a value of about $150m, in its fifth-floor galleries at its New York headquarters, “everything from Wool to Warhol to a big Prouvé house”, Cappellazzo says. The minimum consignment value is $100,000.
“Auction is the marquee of the business, but the growth is in private sales”, Cappellazzo says. “We’re not bettering our commissions, per se, but there’s fewer expenses selling privately rather than mounting a big auction.”