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RAPAPORT... Sotheby's reported a 3 percent year-on-year decrease in its total revenue to $101.7 million for the first quarter that ended on March 31. The decline was principally due to a lower auction commission margin of 15 percent from 18.1 percent one year earlier. Net auction sales increased 23 percent, however. Due to the seasonal nature of the art auction market, first- and third-quarter results at Sotheby's have historically reflected a lower volume of auction activity and typically, a net loss. Sotheby's recorded a loss of $22.3 million or 33 cents per share, up from a loss of $10.7 million one year ago. In order to enhance revenue, Sotheby's enacted a change to its buyer's premium rate structure that became effective March 15, wherein buyers at auction now pay 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 remaining amount above $2 million. For some 98 percent of lots sold, Sotheby's said this change represents an increase of 2 percent or less to the final purchase price and for all lots, a maximum 3.6 percent increase to the final purchase price. "The first quarter showed a solid increase in auction sales compared to the prior year, but the results illustrate how competitive the market is for the highest value consignments. That competition resulted in lower commission margins, which is reflected on the bottom line. It's not where we prefer to be, but these results need to be seen in the context of thinking about the full year 2013. The increase in buyer's premium will help improve revenue margins as the year continues," said Sotheby's chairman, Bill Ruprecht. "The results also show that we continue to invest in the future, moving ahead with initiatives that expand our global relevance and reach: redefining and personalizing the client experience at Sotheby's, delivering web-based tools across the globe so our clients can engage with us anywhere, at any time on any device, presenting a host of truly exciting private sale shows in newly-designed galleries in New York, London and Hong Kong and, of course, expanding our presence in China and elsewhere," he said. Ruprecht added that new markets now account for 40 percent of worldwide buying activity at Sotheby's with very active participation from Latin America and Asia.
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