Tad Smith Begins First Round of Buyouts at Sotheby’s—Who’s Next?
The cutbacks come after a record $1.1 billion sales week.
Auction house giant Sotheby’s is offering employees voluntary buyouts in an attempt to reduce costs. In an email sent to workers on Friday, the company informed staffers that if not enough volunteers choose to opt out, it may have to turn to layoffs. Sotheby’s did not specify the number of jobs slated for cuts.
Despite coming off its largest ever semiannual auction season, reaching a staggering $1.1. billion, Bloomberg Business, which obtained a copy of the email sent to staffers, reports that a 9 percent drop in third-quarter revenue received negative attention from the company’s investors. Last week saw a 16 percent drop in Sotheby’s shares after the auction house reported the decline, pointing to a “sluggish” middle market.
“I certainly understand that announcing a cost reduction program right after two weeks of dazzling sales may be unexpected,” Sotheby’s CEO Tad Smith wrote. “It is our hope—but because this is voluntary we cannot be sure—that this program will achieve both the efficiencies from which our organization would benefit, as well as create enhanced professional development and leadership opportunities for those who will steer Sotheby’s into the future,” said Smith, who became CEO in March.
Staffers interested in the buyout program can submit their applications until November 30. According to the document, employees that are part of a union, however, can’t apply.
Sotheby’s sale of the collection of former chairman A. Alfred Taubman, which was guaranteed at a whopping $500 million, boosted the auction results, but came at a cost. The company claimed that it won’t be able to determine whether the Taubman art trove was profitable until 2016, when cutting the fourth-quarter outlook.
Other auctions saw strong results. Sotheby’s totaled $294.9 million at its sale of Postwar and Contemporary art. The night was led by a Cy Twombly canvas that set an auction record for the artist at $70.5 million. Meanwhile, in its Impressionist and Modern art auction, Sotheby’s moved $306.7 million worth of paintings and sculpture, led by a $67.5-million Picasso.
Speaking to Bloomberg Business, David Nash, co-owner of Mitchell-Innes & Nash gallery in New York and former head of Impressionist and modern art at Sotheby’s said, “Sotheby’s costs of doing business—increased staff, more expensive catalogue production, huge marketing and promotional costs, etc.—have to be balanced against the declining revenue from commissions.”
Sotheby’s annual report from 2014 showed a total of 1,550 employees across its holdings in North and South America, the UK, continental Europe, and Asia.
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