Sotheby's (BID - Free Report) shares rose around 7%, a day after it announced the present chief executive officer (CEO) William F. Ruprecht’s decision to hand in his papers.
Ruprecht’s departure comes six months after activist investor Dan Loeb and two of his candidates joined the company’s board. Dan Loeb’s firm, Third Point LLC, is reportedly the largest shareholder with 9.6% stake in the New-York based auction house.
Sotheby’s stated that Ruprecht’s decision to resign was per “mutual agreement” with the board.
Ruprecht, Sotheby’s CEO for 14 years, will continue to serve as Chairman, President and CEO until the board finds his successor.
Since last year, in a proxy battle, Loeb and other investors were reportedly urging Ruprecht to cut costs and increase shareholder value. Eventually, in May this year, Sotheby’s agreed to appoint Loeb, and two of his allies to its board, thereby putting an end to the fight. Sotheby's shares have declined around 12.9% year-to-date.
On Nov 10, Sotheby’s reported better-than-expected third-quarter results.
Adjusted loss per share of 37 cents per share was narrower than the Zacks Consensus Estimate of 30 cents, quite an improvement from the negative earnings surprises in the past three quarters.
Though total revenue declined 12.7% to $94.2 million during the seasonally slow quarter, it beat the Zacks Consensus Estimate of $91 million by 3.8%. Adjusted pre-tax loss was $34.1 million, a 19% year-over-year improvement, principally due to lower expenses, largely attributable to management's continued cost reduction initiatives.
Other Stocks to Consider
Sotheby's carries a Zacks Rank #3 (Hold). Better-ranked stocks in the retail sector include Bebe Stores, Inc. , Safeway Inc. and PetSmart, Inc. . All the three companies sport a Zacks Rank #1 (Strong Buy).