Sotheby’s Results Are Stronger Than Expected

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Sotheby’s on Friday reported better-than-expected numbers for its third quarter. Credit Ángel Franco/The New York Times

Sotheby’s auction house announced Friday that its third-quarter losses were less than half of the losses that the company experienced during the same period last year, primarily because of a scheduling change and the resolution of a tax issue.

For the three months ending on Sept. 30, 2017, Sotheby’s posted a net loss of $23.5 million, versus $54.5 million during the same time period last year, a difference of 57 percent. The per-share loss was 45 cents this year, down from 99 cents, a 55 percent difference.

Two circumstances were primarily responsible for the improvement. One was that this year, Sotheby’s semiannual Hong Kong sales — totaling $82 million net — occurred during the third quarter, while in the previous year they did not.

In prepared remarks for an analyst and investor call on Friday morning, Mike Goss, the company’s chief financial officer, conceded that the scheduling change was unexpected: “The occurrence of these sales in the third quarter means that the fourth quarter will be negatively impacted to the extent that we all originally expected these sales to occur in Q4.”

The other contributing factor was the addition of a $7.4 million income-tax benefit that the company derived by reversing a reserve it had created in 2013 to address a potential tax liability. The statute of limitations for this liability has elapsed. The infusion of the reserve was a one-time event and will have no influence on Sotheby’s fourth-quarter finances.

The company also cited increased inventory sales as a reason for the relative strength of this quarter. Sotheby’s has made a concerted effort to reduce its inventory in the last several years to free up capital for other projects. At the end of 2015 its inventory was valued at $215 million. Now it totals $63 million.

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