Prestigious sale left Phillips a $65m loser

Auctioneer Phillips thought it would make an impression with its spring sale, but it ended up losing heavily

Phillips de Pury and Luxembourg, the auctioneer, is thought to have lost nearly as much money in a single flagship art sale as its owner, French tycoon Bernard Arnault, paid when he bought the company nearly two years ago.

Industry sources believe that Phillips lost around $65m (£46m) on the recent sale of modern and Impressionist works of art. Artists like Cézanne, Van Gogh, Monet and Picasso were featured in the prestigious sale held in New York in May.

Phillips was bought for around $100m in 1999 by the luxury goods group LVMH, owner of the Moët & Chandon and Givenchy brands, which is controlled by Mr Arnault.

The sale, at the auctioneer's new premises in New York, raised $124m, although estimates for it had been around $200m.

Phillips offered guarantees to some sellers of paintings that if these were not sold, it would still pay up. It is thought that at least six important paintings with guarantees did not find buyers, leading to the losses.

One key piece in the auction, Vincent Van Gogh's Le Jardin Public, was not sold as bids did not reach the $30m reserve price.

However, the auction house did make some inroads. A Cézanne painting, La Montagne Sainte-Victoire, sold for $38.5m, a figure touted as a record for a landscape painting by the French artist.

The sale was the most prestigious ever undertaken by Phillips, which has been trying to move into the higher-profile areas of the art market but has faced serious competition from the leading auction houses, Sotheby's and Christie's.

Phillips has been looking to take business from the two companies while they are both embroiled in a scandal over price-fixing that has shocked the industry. The case has spawned a series of legal actions, both criminal and civil, though the business of the two houses has stood up well throughout the scandal.

Simon de Pury, the chairman of Phillips, said the $65m figure was "pure speculation". He pointed out that the sale had been a success because before LVMH bought the auction house its largest Impressionist sale had raised only $4m. In May last year, a similar auction at Phillips had raised $40m in total, so the more recent sale demonstrated an impressive rate of growth.

Phillips recently merged with de Pury and Luxembourg Art, an advisory firm, to build up its presence in the art world.

Last Friday the company announced its intentions to concentrate still further on the upmarket areas of the auction business, hiving off its middle-market UK auction houses into a joint venture with Bonhams & Brooks, which has the controlling stake. Operations in London's Bond Street and Bayswater are included in the move, and the new venture will trade as Bonhams.

Phillips will now focus on its more upmarket auction rooms such as those in New York and London's Grosvenor Street.

Mr Arnault's purchase of Phillips in 1999 was widely viewed as an attempt to take on François Pinault, who had bought Christie's the year before for £770m. The two are also rivals in the luxury goods area. Mr Pinault's giant retail company, Pinault Printemps Redoute, bought a 42 per cent stake in Gucci, the Italian fashion house, is a move that thwarted a bid by LVMH. The squabble over Gucci has now gone to the courts and attempts to make peace, in which Vivendi Universal chairman Jean-Marie Messier has acted as referee, have so far failed.