Sotheby's Profit Down 7.5% on Debt-Extinguishment Costs

Sotheby's (BID) fourth-quarter profit fell 7.5% as the auction house posted $15 million in debt-extinguishment costs that masked improved revenue.

The auctioneer has seen its bottom line alternate between black and red for a year and a half, as revenue mostly declined in the double-digits, partially due to weaker auction revenue from Asia.

In November, Sotheby's sold a Mark Rothko abstract--"No. 1 (Royal Red & Blue)"--for $75 million, capping a contemporary-art auction whose total of $375 million surpassed any in its company history, The Wall Street Journal reported. However, in the latest period, auction sales fell 1.8%.

The company last month said Chief Executive and President William F. Ruprecht will take on the added title of chairman and added that Michael I. Sovern will remain a member of the board after 13 years as the auction house's chairman.

For the fourth quarter, Sotheby's reported a profit of $66.1 million, or 96 cents a share, down from $71.5 million, or $1.04 a share, a year earlier.

Revenue improved 2.4% to $291.1 million, while expenses edged down 0.3%. The year-earlier period had no debt-extinguishment costs.

Analysts polled by Thomson Reuters projected a per-share profit of $1.09 on revenue of $279 million.

Sotheby's has said its second and fourth quarters are generally stronger than its first and third, due to the seasonality of the art-auction market.

Shares slipped four cents to $38.19 after hours Thursday. Through the close, the stock is up 32% over the past three months.

Write to Debbie Cai at [e-mail]

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