NEW YORK, May 9, 2013 (GLOBE NEWSWIRE) -- Sotheby's (NYSE:BID) today reported financial results for the first quarter ended March 31, 2013.
Sotheby's reported first quarter total revenues of $101.7 million, a $3.2 million, or 3%, decrease from the prior year, principally due to a decline in auction commission margin to 15.0% from 18.1% in the prior year first quarter. Net auction sales increased 23% in the first quarter as compared to the prior year, but this improvement was in the most competitive categories of Impressionist, Modern and Contemporary Art, where the climate for the most high-value consignments remains very competitive and with such consignments often earning thinner auction commission margins. In the first quarter, there was a 35% increase in the total sale price of lots sold over $1 million, where auction commission margin experiences the most pressure.
In order to enhance revenue and strengthen auction commission margins, Sotheby's enacted a change to its buyer's premium rate structure that became effective March 15, 2013. Buyers at auction now pay 25% on the first $100,000 of hammer price; 20% on the portion of hammer price above $100,000 up to and including $2 million; and 12% on any remaining amount above $2 million. For over 98% of lots sold, this change represents an increase of 2% or less in the final purchase price and for all lots, a maximum 3.6% increase in the final purchase price. This price change did not have a material impact on Sotheby's results for the first quarter of 2013, as a large majority of Sotheby's auctions for the period were conducted prior to that date. However, based on sales results and business-getting efforts to date, it is expected to contribute to an improvement in auction commission margin in the second quarter of 2013 when compared to the first quarter of 2013 and the second quarter of 2012.