July 7 (Bloomberg) -- The total volume of sales at London’s June auctions of Impressionist and contemporary works declined 70 percent on last year as auction houses cut jobs and guarantees to sellers to adjust to the financial slump.

Sotheby’s, Christie’s International and Phillips de Pury made 165.9 million pounds ($269.4 million) at the summer sales, down from a record 558.8 million pounds in 2008, according to calculations made by Bloomberg News based on auction house results.

Auction houses have struggled to attract high-value works since abandoning the practice of guaranteeing minimum prices at the end of 2008. Falling prices have also deterred vendors. Nonetheless, all of the London events sold at least two-thirds of their available material. Success rates rose to 92.5 percent and 88 percent respectively at Sotheby’s and Christie’s scaled- down contemporary-art sales on June 25 and June 30.

“People are relieved that what is coming on the market is selling,” London-based dealer in Impressionist art, James Roundell, said in an interview. “The auction houses must be worried about the lack of material coming on the market. They’re going to have to make some serious savings.”

Sotheby’s is aiming for a further 5 percent drop in global headcount following a 15 percent reduction announced last year, the auction house said in April. The company’s New York headquarters closed during the week before July 3 as part of “a number of cost savings initiatives in response to the downturn in the global economy and international art market,” Matthew Weigman, Sotheby’s worldwide director of sales publicity, said in an e-mail yesterday.

Staff Cuts

Christie’s said in January that it was planning a “companywide reorganization which includes significant staff reductions.” The London-based auction house yesterday again declined to comment on the number of layoffs.

Roundell worked as a specialist in Christie’s in the early 1990s during the last art-market recession following the bursting of a speculative bubble for Impressionist works.

“Then you felt you’d driven off a cliff,” Roundell said. “You had no idea what things were worth. It took two or three years for the market to recover. This time the auction houses have arrived more quickly at estimate levels that people are prepared to buy at.”

London’s sales of Impressionist art generated a total of 95.9 million pounds, a contraction of 68 percent on last year. Totals for contemporary art were down 73 percent from 260.9 million pounds to 70 million pounds. It was a similar story in May in New York, where Sotheby’s and Christie’s contemporary auctions registered totals that were respectively 75 percent and 72 percent down on 2008 levels.

Interest Rates

Vendors are hanging onto their artworks, as they are achieving low returns on cash investments. “When negotiating with potential sellers, low interest rates have been just as much a factor as what the works are actually going to make,” said Helena Newman, Sotheby’s worldwide vice-chairman of Impressionist art. “People don’t want to hold cash at the moment. That situation will change as the economy changes.”

Last year in London, six guaranteed works sold for more than 10 million pounds, led by the 40.9 million pounds at Christie’s for Monet’s 1919 “Le Bassin aux Nympheas.” This year the top price of the series was the 7 million pounds paid for Pablo Picasso’s 1969 “musketeer” painting, “Homme a l’epee,” at Sotheby’s June 24 Impressionist sale. The previous evening, Christie’s had achieved 5.8 million pounds for another Picasso “Homme a l’epee” from the same series.

Warhol’s Tunafish

Neither Sotheby’s nor Christie’s was able to sell a contemporary work for more than 4 million pounds. The leading price of the contemporary series was the low-estimate 3.7 million pounds paid at Sotheby’s on June 25 for Andy Warhol’s 1963 “Tunafish Disaster” painting.

Peter Doig’s 1998 cityscape, “Night Playground,” was one of the few works to sell significantly over estimate when it fetched 3 million pounds against a high valuation of 2 million pounds at Christie’s on June 30. Christie’s 40-lot contemporary- art sale registered a success rate of 88 percent, as against the 83 percent achieved at a larger, 58-lot auction the previous year.

“When you price things attractively, people are prepared to compete,” Francis Outred, Christie’s international director of contemporary art, said in an interview. “There are still people prepared to bid beyond estimate, and there is depth to the bidding.”

Phillips’s Rates

Selling rates also improved at Phillips, which found buyers for 84 percent of the 127 lots in its June 29 day auction of contemporary art. Last year a larger selection of 391 lots only managed to sell 57 percent of the material. The total of 2.3 million pounds, however, was less than half the 6.3 million pounds achieved last year.

“The auction houses are behaving responsibly,” Ben Brown, a London-based contemporary-art dealer, said in an interview. “Estimates are way down. They’d rather keep the sales small than take in works that are overpriced.” Brown said he had recently been offered works on consignment by sellers disappointed by the estimates quoted by auction houses.

The fall in volume of sales remained a source of concern for the auction houses, Roundell said.

“They can hold out for a while,” he said. “But if this goes on for two or three years, there will be trouble.”

(Scott Reyburn writes about the art market for Bloomberg News. Opinions expressed are his own.)

To contact the writer on the story: Scott Reyburn in London at sreyburn@hotmail.com.

Last Updated: July 7, 2009 02:59 EDT