Net profits fell from $31.7m to $30m, the company announced at its annual meeting on Thursday, August 3, although revenue had risen from $146m to $157.4m. And figures for the first half of 2000 show an even more marked fall in profits, from $22.2m for January-June 1999 to just $950,000 for the same period this year.
The bulk of the shortfall can be attributed to Sotheby’s expanding Internet sales. Despite sales of $19.6m this quarter (including $8.1m for a copy of the US Declaration of Independence) the Internet cost the company $13.9m to run and lost $10.7m. However, Internet running costs for the first quarter had been even higher, at $19.3m, due largely to increased marketing. Bill Ruprecht, president and chief executive officer of parent company Sotheby’s Holdings Inc, welcomed this “significant reduction” of 28 per cent in the second quarter and vowed: “We will continue to be focused on revenue growth in this area.”
He said operating costs for the group as a whole rose $32.8m for the first half of the year, largely due to the Internet branch and legal costs, but overall revenue was up one per cent – boosted by real-estate sales, and defended the reduced profit, saying: “Sotheby’s ability to achieve $30m in earnings in the second quarter under the extremely challenging circumstances we have experienced this spring is a significant accomplishment.”
Indeed, expectations of a reasonably healthy report led to a slight rise on the New York stock exchange for Sotheby’s Holdings Inc, on the day of the annual meeting, with shares hitting 191/8 cents, up a quarter of a cent, and they continued to rise over the weekend to 197/8 cents on Monday.
But this is still barely half of the mid-November high of 361/8 cents, and follows an abysmal plummet in January/February when millions were wiped off Sotheby’s share price after news broke of a possible prosecution over alleged premium ‘price-fixing’ with Christie’s. The company declared a ‘special charge’ of $3.8m for the first half of 2000, relating primarily to legal costs for the case.