Sotheby’s made it out of the second quarter with a profit even though the art market remained in turmoil.
The art and real-estate broker on Monday reported a 31% year-over-year rise in profits as it cut costs.
Meanwhile, its net auction sales fell 16%, “reflecting a comparable decline in the global art market,” Sotheby’s said in its earnings statement.
“There are a number of geopolitical macroeconomic commodity pricing and financial market uncertainties to leave the art market with a paradox,” said Thomas Smith, Sotheby’s CEO, during the earnings call.
“On the one hand collectors are still buying top quality works of art in well curated sales. On the other hand, consignors who have the luxury of discretion are showing a bit of reluctance to sell their work at this time. This paradox has led to lower overall sales volume this year, down some 30% in to-date.”
In short, there’s still demand from collectors, but sellers do not think this is the best market environment for them.
Some of these collectors are using art as an investment at a time while investors are hunting for yield wherever they can find it. And, sellers would rather wait for a better macro environment instead of letting go of their collectibles in an agitated market.
This combo — the paradox — is not good for middlemen like Sotheby’s.
The art market has been rocked by financial volatility elsewhere, as it mostly involves the ultra-rich whose sentiment and wealth decline in equity downturns.
In May, Sotheby’s sold impressionist and modern art worth $144.5 million at its auction in New York, down 61% from a year ago and the lowest since 2009.
Sotheby’s shares jumped by as much as 13% in trading on Monday after the earnings results showed a profit.
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