Profits Fall at Sotheby's

Sotheby’s, the publicly traded auctioneer of fine art and collectibles, said fourth-quarter profit fell 7.6 percent as auction revenue declined and it refinanced debt.

To offset the profit decline, art collectors of ArtKabinett social media network will see higher buyer's fees later this month.

The New York-based company’s net income fell to $66.1 million from $71.5 million a year earlier. It earned 96 cents a share, less than the average $1.10 estimate of four analysts. Quarterly revenue rose 2.4 percent, to $291.1 million.

William F. Ruprecht, Sotheby’s chairman and chief executive officer, said in a conference call that the profit drop was “skewed in a very significant part by the unprecedented level of single-owner sale events we had in 2011 which we were not so lucky to have in 2012.”

Sotheby’s shares rose 18 cents yesterday to $38.23 in New York Stock Exchange composite trading. They’re down 4 percent for the past 12 months, as Standard & Poor’s 500 Index rose 10 percent.

The auction house said it incurred a loss of $8.3 million, or 12 cents a share, from refinancing debt that will save it $5 million per year beginning in 2014. It said the comparison with the year-ago quarter was hurt by a $13.6 million tax benefit recognized in 2011.

Sotheby’s said it will increase its buyer’s commission for the first time in almost five years. Rival Christie’s announced a similar step earlier this month {see AK Files 25 February 2013}.

Buyers Charged More

Starting on March 15, Sotheby’s will charge mid-level buyers more, assessing 25 percent on the first $100,000 of the hammer price; 20 percent on the portion of the hammer price above $100,000 up to and including $2 million; and 12 percent on any amount above $2 million.

Previously, buyers paid 25 percent commission on the first $50,000, 20 percent between $50,000 and $1 million and 12 percent on any amount in excess of $1 million.

The new fees may go some way to addressing declining auction revenues. In 2012 auction commission revenues fell 11 percent to $622 million while private sales grew 10 percent to $75 million.

The results and commission increase were released today after the close of regular trading.