Sotheby’s reported third-quarter operating revenues of $57.4 million, a $0.9 million, or 2 percent, increase from the prior period, primarily due to higher finance segment revenues, offset by lower auction commission revenues.
For the quarter ended Sept. 30, loss from continuing operations was $30.4 million, compared to $21 million for the prior period, a $9.2 million decline. The international auction house said the decline was largely due to an $8.2 million, or 22 percent, increase in salaries and related costs and a $6.7 million, or 24 percent, rise in general and administrative costs. Because of the seasonal nature of the art auction market, auction sales in the third quarter have historically represented only approximately 7 percent to 10 percent of annual sales, and the third quarter has historically been a loss period for the company.
While salaries and related expenses increased in the third quarter, Sotheby’s said it is important to note that these costs have declined from 42.2 percent of revenues in the first nine months of 2005 to 39.8 percent for the first nine months of 2006. The increase in the third quarter is primarily due to higher equity compensation costs for several key executives and higher fulltime staff salaries.
The increase in full-time salaries is due to strategic additions in key areas of the company, including Contemporary Art, Russian Art, and Asian Art, as well as limited pay increases.