Source: Bloomberg, by Scott Reyburn
Christie’s International will announce a “reorganization” in January as the financial crisis continues to damp demand for art.
The London-based auction house’s e-mailed statement to Bloomberg News yesterday came two weeks after it said it was reviewing its strategic plans because of economic weakness and the results at its autumn auctions. It has already shrunk its London-based wine and book departments, and closed its modern- and sporting-gun section, resulting in five employees leaving the company.
Selling rates -- and prices -- have also dropped at Sotheby’s and Bonhams’s pre-Christmas events in London. November sales in New York ended with almost a third of the lots failing to sell. Sotheby’s on Dec. 4 said that its board approved job cuts that will reduce salaries and other related costs by $7 million in 2009.
“We do anticipate a reorganization to be announced sometime in January. We have no further details to share at this time,” said the Christie’s statement.
When asked if further job cuts or departmental closures would form part of the reorganization, a Christie’s spokesman who declined to be named refused to go beyond the statement.
When approached by Bloomberg News, the auction house would not comment on speculation in yesterday’s ft.com/alphaville blog that owner Francois Pinault was considering selling the company. Pinault’s holding company, Artemis SA, bought Christie’s in May 1998 for $1.2 billion.
An Artemis spokeswoman, who declined to be identified, didn’t immediately respond to emails and a telephone message about the company’s plans for Christie’s.
Christie’s plans to cut estimates on the artworks it auctions by at least 10 percent because of the economic slowdown, Chief Executive Edward Dolman said in a Hong Kong interview after recent auctions.
Christie’s, along with Sotheby’s and Phillips de Pury & Company, has also said it will stop giving so-called guarantees to sellers so it won’t incur losses or be stuck with pieces that don’t find buyers. A guarantee is what an auction house agrees to pay a consignor regardless of whether his property sells.
Although Christie’s achieved a record 16.4 million pounds ($24.4 million) with fees for a blue diamond on Dec. 10, selling rates at mainstream art auctions continue to fall.
Christie’s Dec. 12 sale of 20th-century British art, the mainstay of U.K. private art collecting, ended with 57 percent of the lots successful. The below-estimate total of 4.1 million pounds with fees was less than half the 9.4 million pounds achieved at the equivalent auction last year. Then, 81 percent of the lots were sold.
“The auctioneers are nervous. You can see it in their faces,” Offer Waterman, who deals in 20th-century British art, said in a telephone interview.
“Anything second-rate is falling away dramatically,” said London-based Waterman. “Trade buying has wilted. The good things are still selling, but people don’t want to risk good things at an auction if 50 percent is going to fail.”
Sotheby’s Dec. 9 auctions of marine paintings and Victorian & Edwardian art could only find buyers for 39 percent and 49 percent of the material.
Two days later, Bonhams held a 56-lot auction of Impressionist and modern art in London that it forecast to fetch more than 3 million pounds. Only 23 percent of the works sold, raising a total of more than 600,000 pounds ($928,000) with fees.
“The failure rates are very high,” said London-based dealer David Mason. “If you have something to sell at the moment, you have a problem.”
Mason, a specialist in 19th-century paintings, said he expected auction houses to announce job cuts in 2009.
“As soon as the art market becomes difficult, the auction houses are always the first to make redundancies. It’s not a matter of ‘if,’ it’s ‘when,’” said Mason.
On Dec. 4 Sotheby’s said that its board approved a “restructuring plan” that will reduce the company’s staff levels and other costs by $7 million in 2009. As yet, the New York-based auction house has not said when details of the plan will be announced.
When approached by Bloomberg News, London-based Bonhams, which last year had worldwide sales of $600 million, would not confirm or deny that it was considering its own cost cuts.
By contrast, New York and London’s other main auctioneer of contemporary art and design, Phillips, has said that it may be expanding its workforce.
“As part of the company’s yearly review in addition to increased growth expectations, Phillips de Pury & Company will be analyzing existing staff positions and looking to hire in those areas that are expected to develop,” the company said in an e-mailed statement on Dec. 16. “ We are not announcing any major cuts in staff.”
The Moscow-based luxury retail company Mercury Group said on Oct. 6 that it had acquired a controlling stake in Phillips. Mercury owns the TSUM department store in downtown Moscow and the Barvikha Luxury Village in a Moscow suburb.