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Sotheby’s bruised after ‘bumpy’ trading

New chief executive blames late sale schedule and exchange rates

Sotheby’s new chief executive, Tad Smith, described the auction house’s weaker than expected second quarter as “rather bumpy”, in a call to Wall Street analysts and shareholders on 7 August.

Sotheby’s revenues for the quarter fell to $322m, a 1.1% decrease, while net profit was down 13% for the quarter to $67.6m. Smith put the shortfall down to several factors including the later than usual date of the London contemporary auctions, which fell in the third quarter.

Other issues included currency exchange rates and a loss incurred on a painting acquired earlier in the year and sold at “the low cost”— yet to be paid—at a second-quarter auction, according to Sotheby’s finance director. This was reported as a $15m loss in the accounts.

Private sales were up 32% from $17m to $22m, though the figures are lower than Sotheby’s would like. Smith said the company intended to develop areas including jewellery, automobiles, collectibles and wine.

Despite an announcement that the board had voted to increase the company’s ability to buy back shares from $125m to $250m (a $125m repurchase was announced on 13 August), Sotheby’s shares were down from a one-year peak of $47 to $38 as we went to press.