Sotheby's swings to first-quarter loss as revenue falls

NEW YORK—Sotheby's said Friday it swung to a loss in the first quarter, as the auction house reported a decrease in single owner sales and lower commission margins.

For the three months ended March 31, the company reported a loss of $12.4 million, or 19 cents per share, compared with a profit of $24.3 million, or 37 cents per share, in the year-ago period.

Analysts polled by Thomson Financial, on average, estimated earnings of 10 cents per share on sales of $141.4 million.

Revenue fell 12 percent to $129.3 million from $147.4 million in the first quarter of 2007.

Revenue fell due to lower auction commission margins, the company said, which were required to win consignments. Net auction sales increased 2 percent, but this was offset by a significant decrease in single owner sales, Sotheby's said. Total auction and related revenue declined 17 percent to $107.9 million

Total expenses rose 10 percent to $147.7 million, which includes a 12 percent increase in salaries and related costs, and a 20 percent increase in general and administrative expenses due to higher professional fees and travel and entertainment expenses.

Sotheby's said it expects losses in the first and third quarters because of the seasonal nature of the art auction market.

"The market continues to be strong, and the demand for great works of art remains high, as we have seen throughout the spring," said Bill Ruprecht, president and chief executive, in a statement.

Additionally, Sotheby's announced plans to increase pricing, effective June 1. The change will represent an increase of 2 percent or less in the final purchase price for more than 95 percent of the lots the company sells.