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Pedestrians walk past the Hudson's Bay flagship store in Toronto on Nov. 19, 2019.

Aaron Vincent Elkaim/The Globe and Mail

Hudson’s Bay Co. reported declining sales and a wider loss – but also stable profit margins and a decreasing cash burn – in its final results before shareholders vote Dec. 17 on a take-private bid by Richard Baker, the company’s executive chairman.

The mixed bag of numbers for the company’s third quarter offers a little something for both sides in a battle over the company’s future, but still suggest a company struggling to provide good news to impress the markets. Mr. Baker’s group, saying the retail business is best repaired outside the bright lights of the public markets, has offered $10.30 per share as a “best and final offer” for the company.

Toronto private-equity company Catalyst Capital Group Inc. has proposed paying $11 per share for the entire company, and has won the backing of influential proxy-advisory service Institutional Shareholder Services in questioning the Baker transaction.

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The more HBC struggles, the more it helps Mr. Baker argue his case that his offer is fairly valued. Signs of promise, however, assist Catalyst in making its case that the buyout price is too low.

CEO Helena Foulkes acknowledged the underwhelming numbers on an investor call Tuesday morning, but said HBC is taking steps to turn around. “We’re capable of better results from what is a solid business,” she said.

HBC stock traded as low as $8.80 in morning trading and remained below $9 as the session continued in the afternoon. While the loww as only about 2 per cent below Monday’s close, it marked only the third day since the Baker bid was announced in June that HBC shares traded below $9.

Neither HBC executives nor the analysts questioning them directly addressed the merits of the Baker bid in Tuesday’s investor call.

Ms. Foulkes said the company would continue to make “focused investments to drive growth” while improving the customer experience, reducing operating costs and "capitalizing on the value of our real estate.”

“Many have asked if we expect our strategy to change,” Ms. Foulkes said. “In short, the answer is no."

The results for the third quarter, which ended Nov. 2, were “a bit noisy,” HBC chief financial officer Rebecca Roof said. The company posted gains from the sale of its European operations but had to book a massive tax expense to reflect those gains. (The company will use past tax losses to offset much of that when its returns are filed.) The company conducted liquidation sales that dinged profit margins. It had restructuring charges and gains from settling lease obligations.

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Bolstering Mr. Baker’s assertion that his price for the struggling company is fair given the company’s retailing problems, HBC reported that comparable store sales – revenue from locations open at least a year – fell 1.7 per cent across the entire company, with a big jump at discounter Saks Off 5th offset by declines at Hudson’s Bay and Saks Fifth Avenue.

The company’s net loss from continuing operations – adjusted to remove the Lord & Taylor chain, sold in the current fourth quarter – expanded to $175-million (95 cents a share), up from a loss of $70-million (38 cents a share) in the prior-year quarter. The total net loss of $226-million ($1.23 a share), which included Lord & Taylor, was worse than a loss of $161-million (88 cents a share) the year before. Both swelled in large part to a tax-expense line that was $197-million bigger than the year before.

HBC’s operating loss, with restructuring costs, gains and impairments removed, was $89-million, versus a loss of $74-million a year earlier.

There were, however, some points in favour of those who believe the company’s public investors might want to stick around.

The company’s gross profit margin – sales of products, minus the cost of the products – was unchanged year-over-year, when the effect of the liquidation sales is removed.

Negative operating cash flow was $159-million in the quarter, sharply less than the $408-million in last year’s quarter, according to S&P Global Market Intelligence. HBC had negative operating cash flow of $582-million in the first nine months of its fiscal year, better than the $632-million outflow in the prior-year period.

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HBC has also sliced its net debt – debt, adjusted downward by the cash on hand – by more than half from a year ago. By raising $1.5-billion from the sale of its European operations and paying off a loan, HBC had $1.75-billion in net debt on Nov. 2, versus $3.97-billion on Nov. 3, 2018.

The board of directors declared an unchanged quarterly dividend of 1.25 cents.

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