Auction house Sotheby's reported a whopping 87% drop in second quarter profits. The company reported earnings of $12.2 million. Auction sales were down 66%.
Auction houses have been struggling to secure enough top material to entice bidders, as the economic downturn forces them to rely heavily on individuals selling art for personal reasons.
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The company has seen its credit ratings downgraded to junk status amid concerns about near-term covenant violations and a decline in the world-wide art-auction market. In June, Sotheby's struck a deal that would lower the borrowing limit on its credit line by $100 million but raise the interest rate it pays on its borrowings. The company also said it is in discussions about a new credit line with an expiration date beyond September 2010 to replace its existing facility.
The art market is in a slump right now and huge auctions -- and huge buyers -- are few and far between.
