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Despite another quarterly loss, Hudson’s Bay Co. is showing signs of improvement, especially at its Saks Fifth Avenue luxury chain, even as its flagship store in New York undergoes disruptive renovations.

HBC’s mixed bag of third-quarter results was released on Wednesday, a week after activist investor Jonathan Litt stepped up his calls for a big overhaul of the troubled Toronto-based retailer. He’s pushing for a sell-off of the Saks flagship store and much of HBC’s other businesses and properties.

Helena Foulkes, who took over as chief executive of the parent company in February, said in an interview she agrees with Mr. Litt and his Land & Buildings Investment Management LLC that HBC is undervalued.

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“I welcome the feedback from all of our shareholders,” Ms. Foulkes said, adding the initiatives she has taken are starting to pay off. But she declined to get into specifics of Mr. Litt’s call to action. “We are starting to produce the results … with a real sense of urgency to drive growth and value,” she said.

In the face of rising complaints from Mr. Litt, whose firm is believed to own roughly 3 per cent of HBC shares, HBC is racing to turn around its flagging operations and sell off its weakest parts while fighting off e-commerce titan Amazon.com Inc. and discounters such as Walmart Inc.

Under Ms. Foulkes’s leadership, HBC divested almost half of its stake in its ailing European division, decided to close some of its struggling Lord & Taylor stores in the United States and sold its troubled Gilt.com flash-sale fashion business.

By the end of January, HBC is slated to close its $1-billion deal with WeWork to sell the Lord & Taylor flagship store in New York to the workplace-sharing firm, going a long way to reducing HBC’s debt.

Mr. Litt declined to comment.

Ms. Foulkes said in the interview she was pleased with the retailer’s third-quarter performance. “I think the bold actions we’ve been taking in the last nine or 10 months are starting to pay off.”

She pointed to Saks, whose sales at existing stores – a key retail measure – rose 7.3 per cent in the quarter and improvements at HBC’s namesake Hudson’s Bay chain in Canada.

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Even so, she acknowledged that if it hadn’t been for an annual Bay Days promotion in the third quarter – a sale that is usually held in the retailer’s fourth quarter – those Hudson’s Bay sales at existing stores would have declined slightly.

She’s confident her efforts to improve customer service and digital operations will generate better results, she said. “There’s more upside there,” she said of the Canadian chain. “I’m feeling even better about the future than I was six months ago.”

Mark Petrie, retail analyst at CIBC World Markets, said HBC’s third-quarter results are encouraging. They were driven by an improvement in same-store sales at existing outlets, which over all were up 1.2 per cent when excluding the benefit of the Bay Days sales, as well as a higher gross profit margin and “moderate” cost controls, he said.

But Lord & Taylor “continues to materially struggle,” Mr. Petrie said. At the same time, Saks’s same-store sales gain of 7.3 per cent “is the best result in years and third consecutive quarter above 6 per cent,” he said.

Investors seemed pleased, pushing HBC’s shares up almost 5 per cent to $9.49 in Wednesday trading on the Toronto Stock Exchange.

HBC’s third-quarter loss was a result of higher depreciation and amortization expenses and foreign-exchange losses, the company said. Its net loss from continuing operations grew to $124-million, or 52 cents a share, for the three months ended Nov. 3, from a loss of $116-million, or 64 cents a share, a year earlier.

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Including HBC’s European operations, which are now in a joint venture with Austrian Signa Holding, the company posted a net loss of $164-million, or 69 cents a share, narrower than the loss of $243-million, or $1.33 a share, a year earlier. Overall sales rose 5.6 per cent to $2.19-billion.

The retailer’s gross margin picked up by 0.1 per cent to 39.4 per cent, mainly because of improved full-price sales and better clearance markdown margins, it said.

Ms. Foulkes said she’s pleased with the start of the holiday season so far in Canada, despite a more competitive environment in that market.

“The online and physical retailers are upping their game,” she said. “That’s great for Canadian shoppers and we’re responding. … We have a real right-to-win in this market because Canadians love our Canadian heritage.”

She said Hudson’s Bay is benefiting from last year’s collapse of Sears Canada Inc., especially at stores close to a former Sears outlet. Sears shut its last stores at the beginning of 2018.

She said she is focusing on improving Hudson’s Bay’s digital business, which had a record day of e-commerce sales during the Black Friday promotion in late November.

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“I expect more as we move into 2019,” she said. “We’re certainly not done yet, but we’re trying to move as swiftly as we can to make the right strategic decisions for the future.”

She reiterated what she has said since her arrival at HBC: “Everything still is on the table.”

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