Cost cutting remains Sotheby’s leading aim

For the year as a whole, revenues are up 2.6 per cent, with the net loss increased by 31 per cent, two thirds of which is explained by anti-trust settlements.

Staff retention costs, including directors’ bonuses, represent the second biggest extraordinary cost, accounting for 23 per cent of the year’s net loss.

Chief executive Bill Ruprecht said the company was ahead of target on cutting costs and returning to profitability. “We exceeded our goal of $60m in annual savings versus our 2000 cost base (excluding charges related to anti-trust related matters, the company’s restructuring plans and employee retention costs). In fact we achieved over $70m in annual cost savings and we expect to achieve further savings in 2003 as management continues its focus on reducing the company’s cost structure.”

The company’s finances have been helped considerably by the lease-back arrangement negotiated for their New York headquarters, which brought them $167m.

Mr Ruprecht said that $100m of this would be used to refinance borrowings and fund anti-trust settlement claims. The restructuring of Sotheby’s Internet service is likely to mean a further annual saving of $8m, he added.

Further annual savings of about $4m are expected to come into effect in the second quarter of 2003 as the company lose another 50 staff across Europe. This follows restructuring charges of $4.2m in the final quarter of 2002 as 60 staff went.
Total auction sales, including buyer’s premium, increased 10 per cent to $1.8bn, neck and neck with Christie’s, who announced their results last week.

• Baron Capital Group is reported to have sold 6m of its 14.8m Class A limited voting shares in Sotheby’s within the last month, reducing its stake in the company from 33 per cent stake to 19.6 per cent.