Sotheby’s released its fourth-quarter and 2017 overall earnings on March 2. The auctioneer notched up $5.5 billion in consolidated sales last year, up 12% from 2016.
The key drivers of growth were from Asian clients, who spent $1.6 billion, and private sales, which jumped 28%, to $744.6 million.
The result leaves Sotheby’s behind its main competitor, the privately owned Christie’s, which last month reported $6.6 billion of sales in 2017, a 21% increase in US dollars, The Art Newspaper wrote.
The company, however, reported a stabilizing financial situation after two years of flux that coincided with a drop in the global auction market and the $85 million acquisition of the advisory firm Art Agency, Partners in 2016. Earnings per share of the publicly traded firm rose 73%, from $1.27 to $2.2, by the end of 2017.
More than 300 auctions of 50,000 items yielded $4.6 billion 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 $37.7 million—and Jean-Michel Basquiat’s painting Untitled (1982), bought by Japanese collector Yusaku Maezawa for $110.5 million, the company’s highest price of the year.
The sale of a Picasso for £49.8 million ($70 million) in its London Impressionist and Modern evening auction on February 28 bodes well for the market in the new year, Smith added.
“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 said.
The firm’s Hong Kong saleroom contributed $850 million, 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 totaling $180 million. The volume of underbidding online exceeded $500 million.
Smith said 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”, said 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.”
