The FINANCIAL — Sotheby’s (BID) swung to a first-quarter profit on lower expenses that masked a modest decline in the auction house’s revenue, according to Nasdaq.
Prices and demand for art and collectibles have been surging to historic levels recently, but Sotheby’s bottom line has struggled to keep pace. The auction house is in a heated competition with rival Christie’s International to win rights to sell attention-getting masterpieces.
It’s the first quarterly earnings report since Sotheby’s new Chief Executive Tad Smith took the helm at the end of March. The former CEO of Madison Square Garden Co. succeeds Bill Ruprecht, who agreed to step down last November, after shareholders publicly campaigned for a leaner, more profitable company. Mr. Ruprecht’s resignation also came months after hedge-fund activist Dan Loeb and several others joined the company’s board. Mr. Loeb’s hedge fund Third Point LLC joined the board in May, ending a seven-month campaign to shake up Sotheby’s.
More recently, activist investor Marcato Capital Management LP has been scrutinizing Sotheby’s performance and urging greater returns for shareholders.
Overall, Sotheby’s reported a profit of $5.2 million, or seven cents a share, compared with a year-earlier loss of $ 6.1 million, or nine cents a share. Excluding costs related to the company’s CEO transition and other items, year- earlier expenses related to shareholder activism and other items, per-share earnings were 11 cents, compared with a year-earlier loss of four cents. Revenue edged down 0.7% to $155.7 million as sharply lower principal revenue offset growth in agency revenue, finance revenue and license fees.
Analysts polled by Thomson Reuters expected break-even results on a per-share basis and revenue of $152 million.
Auction commission revenue rose 8% on stronger margins resulting from a change in the buyer’s premium rate structure in February and a lower level of buyer’s premium shared with consignors. Net auction sales increased 3%.
Total expenses fell 10%.
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