Dear Dan Loeb: We're Doing Just Fine. Regards, Sotheby's.
Amid an ongoing proxy fight with activist shareholder Dan Loeb, Sotheby's released preliminary first-quarter earnings this afternoon that underscore the continued boom in the global art market. Given Sotheby's ongoing fight with Loeb—and Loeb's efforts to place himself and two hand-picked directors—on the auctioneer's board of directors, it is perhaps not surprising that Sotheby's released such bullish preliminary results two weeks before the actual earnings report is due, on May 7.
Shareholders are scheduled to vote on Loeb's proposals on May 6.
The auctioneer said net auction sales increased by 40 percent since last year, to approximately $730 million. The substantial improvement was due to a $113 million, or 34 percent increase, in sales of Impressionist and contemporary art. Typically the house realizes the bulk of its revenue in the second and fourth quarters, which include the results of the major New York sales that take place each spring and fall.
Sotheby London's sale of Impressionist art in February was its highest-ever total for any sales series held in London. CEO Bill Ruprecht said the results “demonstrate that we are executing on our strategic plan and are well positioned to further build on the substantial momentum and record results we achieved in 2013."
The positive news certainly bolsters Sotheby's argument that the house is doing just fine with current management.
Sotheby's recently mailed a letter to shareholders, encouraging them to support the current board and claiming that Loeb's firm, Third Point, has "presented misleading information that distorts the reality at Sotheby's." Among other points raised, the letter said, the auction house is "increasing its global footprint by expanding into key emerging markets," and its ongoing initiatives to increase private sales are succeeding. Sotheby's said 2013 private sales totaled $1.2 billion, an increase of 30 percent from 2012.
UPDATE: This morning, Institutional Shareholder Services (ISS), the largest proxy adviser firm, came out in support of Loeb's proposal to place himself and another nominee, Olivier Reza, on the board. ISS rejected a third nominee put forth by Loeb, Harry J. Wilson. Sotheby's had already offered Loeb a seat on the board a few months ago but Loeb rejected that offer.