Sotheby's CEO on Business Outlook

Joining us exclusively this morning is Charles Stewart. He’s CEO of Sotheby’s. And Charles, we know you guys are really doubling down on the market here. You’re opening up a huge store premises in the centre of Hong Kong later in the year. At the same time though, we are seeing some signs. Well, Hong Kong’s issues are pretty well flagged at this point in time. A lot of economic weakness, geopolitical overhang and you’ve got signs of softening in the Chinese art market as well. So why are you making this commitment at this point in time? Well, I think that no matter what you might say about this particular moment in some of the cyclical pressure, which is you say as well well documented, there’s also no doubt that this is a very long term exciting area of growth, region of growth. And we we still see that at Sotheby’s we’ve had three years consecutively of over a billion U.S. dollars of sales here in Hong Kong. To get that that those number of sales though we do know you’ve pushed through some fee cuts for buyers of fine art and other luxury goods. What kind of impact is that happening having on your revenue? Yeah, actually I wouldn’t say we’ve, we’ve pushed through fee cuts across the board. We’ve chosen to publish our fees in a very transparent way for buyers and sellers. It is true that for buyers who used to pay as much as 27% buyers premium that is now a flat 20%. So that’s certainly exciting. We think we’ll stimulate additional additional demand as well as clarity and transparency for sellers. This is really all part of trying to bring broader audiences you know, into our ecosystem along with the opening of our Maison concept in Hong Kong which means we’ll be, you know, we’ll be present every day here. When you talk about expectations of that having an impact, have you seen much of a difference already from the fee cut? Well, it goes into effect only next month, so you know, we’ll see it really in the second-half of the year here. The reception to it has been uniformly positive because for buyers, of course paying lower fees is, is, is only a positive. And I think that there’s a clear understanding that we are promoting transparency, access and you know greater participation in the art market through these moves. Charles, I wanted to get your thoughts on what happened with the Louisiana auction, which I think came as a a shock to a lot of people, full quarter of that lot failed to sell. Do you see that as being sort of a one time occurrence? What did you learn from that experience? Well, I would say that you know we did sell the highest value Western Western painting in Asia, you know during that sale last year. So there were clearly some bright spots as well. I would say in the fourth quarter is when we saw you know a degree of of of movement in the markets globally that’s not just Asia or China comment. And so you know there there was, there was some effect but you know I think one of the things we’re seeing is that we talk a lot about buyers and a lot about you know concern about the market but we are A2 sided marketplace, you know we are about volumes. So in some of these moments you see sellers coming to market who may not have come previously. So I think that you know it’s it’s about volumes for us and overall our sell through rates and results are not just healthy, they’re strong. Getting new new sellers into the market also perhaps comes down to new categories that you’re offering as well. So which ones are you really focusing on building? Yeah, yeah. I think first of all for us, you know we are, we sell across 50 different departments and certainly art, you know, in all of its different forms is the largest. But then we think about luxury categories, whether that is cars, jewelry, wine and spirits, watches, collectibles, we have handbags, we have an exclusive exclusive arrangement with the National Basketball Association to sell game worn, game worn sports, collectibles, NBA jerseys and so on. And there’s demand for all of that here in Asia, that’s for sure. As we see convergence of taste, you know amongst art and luxury and lifestyle expanding Sotheby’s in the footprint, perhaps another direction to take that would be through a listing, would you be exploring an IPO and if you were doing that, would you be looking at selling all or parts of the company in that process? There’s no plan certainly to sell the company nor for any IPO. We are happy as a private company. We’ve got a very strong shareholder who is extremely passionate and committed to the business and that’s a real, that’s a real benefit and source of of strength for us. So no, I don’t think that’s something that we’re evaluating now. Who knows what the future holds, but it’s not in the plans currently. Charles, we’ve talked about some of the uncertainties more broadly. I was wondering if you could give us a indication in terms of how much confidence there is for buyers and sellers in terms of private transactions. Sure. I mean, we have two main sales channels, our auction channel and our private selling. We sell well over a billion dollars a year in our private dealing which is private transactions but also online sales, e-commerce, retail, our new maze zone concept in Hong Kong. I think we’ll see significant growth in in those more fixed price channels perhaps. So private sales have been strong and in moments of uncertainty private sales tend to do do better because buyers and sellers value speed, discretion certainty. So that get those are all you know points of support for the private sales market. But we’re seeing strength on on on both sides. I’m I’m here this week in part because we are opening our sales here in Hong Kong next week. We have you know 21 sales next week well over 3000 objects that we will bring to market and sell across a lot of categories. And so you know we’ll see good activity both in private sales but also in auctions. Alright, Charles, that was Charles Stewart, the CEO of Sallebase and of course looking forward to the to launch of that or the opening of the Maison later this year.