Sotheby's Cutting Jobs

Bloomberg is reporting that after the third quarter losses, Sotheby's has fired employees due to the continued economic downturn in both art and real estate. According to the report, Christie's is also reviewing its staffing requirements for the near future.

Some in the industry feel that hard economic times benefit auction houses, since more collectors desire to sell and therefore more property is moved through auctions. This might be true at the local and regional levels. At the top end of the market it becomes more and more difficult to maintain prices, growth, exceptional property as well as continued investment returns to sustain the international houses. If they are ony selling 50% of the items cataloged, and most property is selling below the low estimate, it is difficult to see the positives and the cuts in staff become more understandable.

The Bloomberg report stated Sotheby’s spokeswoman Diana Phillips declined to say how many jobs were eliminated. The company said in a filing that the board’s three-man executive committee approved cuts reducing salaries and other related costs by $7 million in 2009. Rival Christie’s is “reviewing our strategic plans in light of the current global economic environment and our sale results for this autumn,” it said in a statement.

Christie’s said it has consolidated the London wine sales group to its King Street salesroom and cut the department’s payroll by three. At the end of October, Christie’s also closed its modern and sporting gun department. The department head left the company.

Sotheby’s shares are down 77 percent this year, falling 62 cents today, or 6.6 percent, to $8.72 in New York Stock Exchange Composite trading. Sotheby’s suffered about $53 million in losses from guarantees at recent auctions that it extended to sellers as prices fell short of presale estimates. It is “developing additional global cost reduction proposals,” the filing said.