Sotheby&#39;s at risk following huge first quarter loss

Art auctioneers Sotheby’s has reported a Q1 loss of $25.9m, but President and CEO Tad Smith said the company’s second quarter had several “high points”, including a 17% rise in Hong Kong sales. Sotheby’s has seen a 33% drop in commissions, reflecting the general market trend, but has also witnessed the departures of several key members of staff, as well as the controversial acquisition of Art Agency, Partners and the A. Alfred Taubman collection, which cost the company USD 509m.

On Monday, as the spring auction season began in New York, Sotheby’s announced a $25.9 million loss for the first quarter of 2016, compared to income of $5.2 million the year before. The publicly held auction house said that the loss was unremarkable, having posted a first quarter loss for 22 out of the last 25 years.

Still, Sotheby’s could have used some good news at a time when the art world is watching to see whether the tumultuous changes wrought by the company’s president and chief executive, Tad Smith, are paying off.

Mr. Smith has invited this kind of scrutiny by spending up to $85 million for a boutique art advisory business in January even as he reduced staff by 80 people through buyouts, incurring an expense of $40 million.

The reorganization included bringing in Amy Cappellazzo, a former Christie’s executive and co-founder of the acquired Art Agency, Partners, to lead a new fine art division, above several of Sotheby’s longtime specialists. This helped contribute to the departures of more than a dozen executives, resulting in a significant brain drain for the auction house, several art experts said.