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Chart for Sotheby's Common Stock (BID), 2011 to date, via YAHOO
Chart for Sotheby's Common Stock (BID), 2011 to date, via YAHOO

Art Market Watch

Aug. 5, 2011

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“Luxury Goods Fly Off Shelves,” said the front page New York Times headline on Thursday, Aug. 4, 2011. “Stocks in Worst Tumble in 2 Years Amid Global Worry,” said the NYT’s banner head on Friday, Aug. 5, 2011. Which sector of the economy do you think the fine art market is in?

As it happens, Sotheby’s had issued its half-year report on Aug. 3, announcing total sales of $3.4 billion in the first half of the year, up 55 percent from the same period last year and a new high for any first-half consolidated sales.

Sotheby’s topped its archrival Christie’s, which reported first-half 2011 totals of $3.2 billion two weeks ago. In the battle of the auction houses, one constant is the back-and-forth. In the first half of 2010, Christie’s won out with 2.57 billion, compared to $2.2 billion for Sotheby’s.

In the blockbuster contemporary art auctions in New York this May, Christie’s also triumphed, with a $301.6 million sale compared to Sotheby’s $128.1 million. A month later in London, the tables turned again, as Sotheby’s did $206 million in its evening contemporary art sale, an new London record; Christie’s brought in $146.8 million, or 25 percent less.

At any rate, according to our back-of-the-envelope calculations, the global auction market is on track for a total of $13 billion for 2011. For what it’s worth, Sotheby’s stock, always rather volatile, closed today under $40, near its YTD low; changed its rating on Sotheby’s stock from “hold” to “buy.”

In its report, Sotheby’s noted that it had also set a record for quarterly net income in the second quarter of 2011, a total of $129.7 million, up 54 percent from the same quarter last year. “The best quarter in Sotheby’s history,” said Sotheby’s CEO Bill Ruprecht, who noted that the first quarter brought in another optimistic $127.2 million. “As I look back on these extraordinary six months for our business, the global appeal of art was one of the few constants in a period of continued economic uncertainty,” Ruprecht said in the release.

Both houses attributed the growth to a boom in the Chinese art market as well as private sales, which were up 114 percent at Sotheby’s.

The good results certainly cast Sotheby’s as something of a miser in its ongoing labor dispute with its art handlers’ union. The workers have been picketing outside the Manhattan headquarters this week, reportedly seeking a raise to a starting wage of $17.50 an hour, similar to terms offered by Christie’s. Despite the good financials, Sotheby’s management argues that its operating expenses -- cut drastically at the beginning of the recession only a few years ago -- increased by 23 percent, or $54.1 million, in the first half of the year.

In its report, Sotheby’s took the opportunity to boast of upcoming highlights. These include a $40-million trove of artworks and furniture from the collection of Lily and Edmond J. Safra, which goes on the block in New York, Oct. 18-21, 2011, and a $25 million Gustav Klimt landscape, Litzlberg am Attersee, which is included in the Impressionist and modern sale on Nov. 2, 2011.

An example of the firm’s branching out into the non-auction part of the art market is “Beyond Limits,” Sept. 16-Oct. 30, 2011, a “selling exhibition” of large-scale outdoor sculpture on the grounds of the ancestral home of the Duke and Duchess of Devonshire at Chatsworth, featuring installations by René Magritte, Takashi Murakami, William Turnbull and others.

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