3/23/2014

Bonhams Record Year


The NY Times is reporting on recently released sales for Bonhams, which in 2013 had its highest totals ever at $947 million. Not only were sales good, but Bonhams was also profitable with a net income of nearly $40 million.  The article states the reason sales are good it they are filling the gap below Sotheby's and Christie's, but also they dont have to bargain and discount for upper middle market items. The NY Times called it the auction sweet spot. Sotheby's made 2.1% on sales.

Bonhams has always been good friends to appraisers in general and to ISA in particular sending speakers and sponsoring for the past several years the ISA annual conference.  Bonhams is again a sponsor at the ISA Conference coming up in April 25-28 in Kansas City.

The NY Times reports
LONDON — The 19.6 million pounds paid in July for a 1954 Mercedes-Benz Grand Prix racing car and the £17.1-million sale in December of an 18th-century portrait by Jean-Honoré Fragonard are just two of the most recent results that have helped bolster the status of the London-based auction house Bonhams, which announced on Tuesday worldwide sales of £574 million, or $947 million, in 2013.

The Fragonard was yet another big purchase by the New York-based collector Leon Black, two dealers said.

The total was the highest-ever achieved by Bonhams, which has a network of nine salesrooms spanning Britain, the United States, Australia and Hong Kong. Founded in 1793, Bonhams has always had ambitions to compete with the “big two” houses, Sotheby’s and Christie’s, but has suffered from a long-held perception that it’s still a home mostly for middle-of-the-road antiques. But now Bonhams is trying to change its image. It has spent £30 million on a sleek new 60,000-square-foot headquarters on Bond Street, which opened in October. It’s also making money. Last year, it made £21.9 million net income, or 3.8 percent, from its 2013 sales.

Given that we’re supposedly in the middle of an art market boom, this might not seem a stellar performance. Yet Bonhams’s neighbor, Sotheby’s, which is under pressure from the billionaire investor Daniel S. Loeb to change its board and chief executive, could only make 2.1 percent net profit from a record annual sales total of $6.3 billion in 2013. (Sotheby’s reports its earnings in dollars.)

Christie’s, owned by the French billionaire François Pinault, sold £4.5 billion of art and collectibles in 2013, a record total for the fourth straight year. Unlike Sotheby’s and Bonhams, it doesn’t report revenue or net profit.

“Bonhams are in a sweet spot of lower-value items where they don’t have to discount their fees,” said Philip Hoffman, a former director of Christie’s, who is chief executive of the London-based Fine Art Fund. He was pointing out that auction houses charge vendors less the more an item is worth.

“Sellers can’t haggle over something valued at $10,000,” he said. “Owners of modern and contemporary works worth over $10 million are very competitive, and it’s very expensive for auction houses to get into that market.”

Fine art auctioneering, even in the good times, remains a service industry with high marketing costs and low profit margins, particularly for expensive items. It’s a different financial model from, say, luxury fashion.

On Thursday, Hermès, the Paris-based maker of the signature Birkin leather handbag, reported a net profit of 790 million euros, which was 21 percent of sales of 3.75 billion euros, in 2013. “Hermès can make something for €200 and sell it for €800,” Mr. Hoffman said. “The auction houses can’t do that. They have smaller margins.”
Source: The NY Times

No comments: