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Sotheby's sales up 12% to $5.5bn in 2017

Auction house releases its latest earnings, showing growth driven by Asian clients, private sales, and online auctions

Auctioneer Oliver Barker took the winning bid on Jean-Michel Basquiat's Untitled (1982), which sold for $110.5m last May at Sotheby's New York Courtesy of Sotheby's

Sotheby’s released its fourth-quarter and 2017 overall earnings today. The auctioneer notched up $5.5bn in consolidated sales last year, up 12% from 2016. The key drivers of growth were from Asian clients, who spent $1.6bn, and private sales, which jumped 28%, to $744.6m.

The result leaves Sotheby's behind its main competitor, the privately owned Christie's, which last month reported $6.6bn of sales in 2017, a 21% increase in US dollars.

The company, however, reported a stabilising financial situation after two years of flux that coincided with a drop in the global auction market and the $85m acquisition of the advisory firm Art Agency, Partners in 2016. Earnings per share of the publicly traded firm rose 73%, from $1.27 to $2.20, by the end of 2017.

More than 300 auctions of 50,000 items yielded $4.6bn in sales last year. Tad Smith, Sotheby’s president and chief executive, cited such highlights as a record for Chinese ceramics—the Ru brush washer, sold in Hong Kong for $37.7m—and Jean-Michel Basquiat’s painting Untitled (1982), bought by Japanese collector Yusaku Maezawa for $110.5m, the company's highest price of the year. The sale of a Picasso for £49.8m ($70m) in its London Impressionist and Modern evening auction on 28 February bodes well for the market in the new year, Smith adds.

“China continues to do well, the Americans are buying in force, and there are some interesting patterns of enthusiasm in Central Asia and the Middle East”, Smith says. The firm's Hong Kong saleroom contributed $850m, making it the highest-grossing international auction house in Asia.

Alongside investments in data tools and digital marketing, Sotheby’s doubled the number of online-only auctions last year and in August did away with buyer’s premium for those sales. Nearly a quarter of all lots sold last year were purchased online, with online sales totalling $180m. The volume of underbidding online exceeded $500m. Smith says the recent acquisition of Viyet, an interior design platform, would enhance its middle-market capabilities: “We are not only selling things online, we are bringing in consignments online.” Mobile bidding will arrive later this year.

Smith also indicated that third-party guarantees, which have crept back into the business model over the past 12 months as a way to win plum consignments in a discretionary selling climate, are likely to be maintained or grow in 2018. Sotheby’s Financial Services, the firm’s art financing wing, has “grown to a large and robust independently financed business” and “will evolve to extend its benefits to our consignors, our irrevocable bidders, and other clients”, says Smith. “Crucially, Sotheby’s strategy is not to be the biggest market-share player—although many times it turns out that we do have the largest sales—nor to be the cheap consignment deal. Instead we aim to be the best choice for those clients.”