Third Point released a 30-page deck last night making their case for three board seats on Sotheby’s board of directors. Here is Loeb’s list of growth opportunities:
Strategy
Define what Sotheby’s is today or what it wants to be
◊ Competitors are laser-focused on the consumer experience and their brand, while Sotheby’s appears indifferent
Articulate a long-term growth strategy and vision for the Company and its brand
Formulate a strategy to manage the inherent cyclicality of its markets
◊ Contingency plan for the next downturn should have both defensive and offensive elements (e.g., prudent management of capital and expenses, opportunity to be a buyer or lender of last resort, development of cycle proof earnings streams)
Auctions & Private Sales
Invest in long-term talent development and recruitment
Cultivate numerous points of contact within the Company so that collectors and consignors become clients of Sotheby’s, not just individual specialists
Invest in front-end technology to facilitate online sales and auctions
Invest in data technology to record private sale and auction inquiries to promote cross-selling, improve customer service, and increase volume
Follow up with clients to drive cross-selling to capture a greater share of each client’s relevant spending
Develop a robust approach to smaller ticket items in order to grow the customer base and compete more effectively with Christie’s
Secured Lending
Deploy more capital against profitable secured lending business, especially now that the business has a separate debt facility to efficiently fund loans (consignor advances, general term loans)
Principal & Dealer
Build a private business: initiate a greater number of curated auctions and exhibitions to leverage Sotheby’s client base, real estate, and relationships
◊ Opportunity exists to take share from art dealers and gallery owners (some of which are rumored to be generating over $ 1 billion of sales annually) given Sotheby’s superior and continuous legacy, global footprint, and in-house expertise
No defined long-term plan for the Company’s S|2 galleries
◊ How are artists chosen?
◊ How does Sotheby’s leverage its entire platform to promote them?
◊ And why is it even called S|2 and not Sotheby’s?Consider partnering with living artists and representing artists’ estates
Brand Extension
Explore additional brand extension opportunities
◊ E.g., wine storage, data analytics
Develop a more thoughtful retail strategy
◊ What is the long-term plan for Sotheby’s Diamonds and Sotheby’s Wine?
◊ How can the Company better utilize its locations when auctions aren’t happening?
