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Following a poorly executed turnaround plan, Hudson’s Bay Co. is now looking at shaking up its business under a new leader in a bid to perk up disappointing financial results.

“There are no sacred cows,” Helena Foulkes, who took over as HBC’s chief executive officer six weeks ago, said on Wednesday. “We’re looking at every part of the business to improve performance and everything is on the table.”

The Toronto-based department-store retailer, which runs its namesake chain, luxury Saks Fifth Avenue, Lord & Taylor and Galeria Kaufhof in Europe, faltered in carrying out its restructuring, resulting in difficulties in shifting staff and operational functions and hurting its fourth-quarter business, Ms. Foulkes told an analyst conference call.

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“The strategy was the right one - I think the execution of it was not good,” said Ms. Foulkes, who took over from Jerry Storch after he left abruptly last fall in the midst of putting into place the transformation plan.

“It is clear that things do need to change,” Ms. Foulkes added. “I feel like we have a very good roadmap for delivering better results in 2018.”

HBC has suffered from a painful industry-wide shift to a more digital business but also from its own missteps, both in its e-commerce and physical stores. It stumbled in trying to improve its critical online operations as well as its discount - or “off-price” - segment, which includes Saks OFF 5th, despite the fact that off-price is one of the few growing sectors in retailing.

Now its massive cost cutting and staff reduction efforts -- aimed at generating $350 million of annual savings – have gone awry, forcing the already-challenged retailer to “take a step backwards,” Ms. Foulkes said.

Known as a leader who doesn’t shy away from taking bold steps, Ms. Foulkes is the first female CEO of Canada’s oldest retailer. She was previously president of CVS Pharmacy, the drugstore division of U.S.-based CVS Health Corp.

At CVS she played a key role in repositioning the stores to focus more on health and beauty – adding “health” to the company name – and developing its loyalty program by using that of Canada’s Shoppers Drug Mart as a model. This year she vowed to stop significantly retouching images used in the retailer’s beauty product advertising.

HBC, in its fourth quarter, posted its first profit in two years but missed analysts’ expectations in a crowded retail landscape that is seeing e-commerce heavyweight Amazon.com Inc. continue to put pressure on incumbents’ sales and profit margins.

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HBC’s fourth-quarter profit rose to $84-million or 39 cents a share compared with a loss of $152-million or 83 cents a share a year earlier. The increase flowed mainly from a tax benefit from recent U.S. tax reforms, the company said.

Adjusted profit, excluding one-time items, was $20-million, missing analyst expectations of $120.18-million, according to Thomson Reuters I/B/E/S.

Richard Baker, HBC’s executive chairman and a U.S. real estate expert, has been working on mining value from the retailer’s significant real estate holdings as he grapples with shifting consumer shopping trends that favour e-commerce and off-price destinations and increasingly turn away from department stores.

Sabahat Khan, a retail analyst at RBC Dominion Securities, said HBC’s fourth-quarter results were mixed. He pointed to stronger sales at existing stores at Saks Fifth Avenue and Hudson’s Bay but below-forecast sales at the retailer’s off-price, Lord & Taylor and European stores. And adjusted EBITDA (earnings before interest, tax, depreciation and amortization) were below targets, he noted.

Mr. Baker said: “While we are not pleased with our recent performance, we continue to capitalize on the value of our real estate portfolio and are taking action to improve our operating results.”

The company is paring back its capital spending this year to between $450-million and $500-million, from almost $600-million in 2017, its executives said. But it faces more challenges in the coming year, including annual costs of between $30-and $40-million as a result of new minimum wages in some provinces in Canada, said Edward Record, HBC’s chief financial officer.

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And in its fourth quarter, HBC took a non-cash impairment charge tied to the Gilt trade name. HBC acquired the online flash-sales site in early 2016.

In January, Moody’s Investors Service downgraded HBC’s ratings, saying that changing consumer behaviour is forcing department store retailers to bolster their technological capabilities and operational execution.

Sales at existing stores in Hudson’s Bay’s digital division, including its troubled Gilt online division, rose 2.8 per cent in the three months ended Feb. 3. Those same-store sales in its European division, which includes Kaufhof, Germany’s largest retail chain, and new stores in the Netherlands, fell 3.4 per cent. They also fell across all other divisions except Saks Fifth Avenue, where they rose 2.1 per cent. Overall same-store sale dropped 2.4 per cent.

In all of fiscal 2017, HBC reported a loss of $581-million, or $3.04 a share compared with $516-million, or $2.83 in the previous year. Retail sales slipped to $14.35-billion from $14.45-billion.

HBC said last month it had rejected Austrian property and retail group Signa Holding GmbH’s 3 billion euro bid for the Kaufhof unit, and that Signa had withdrawn its offer, a day after HBC named Ms. Foulkes as CEO.

German media reported last week that Kaufhof was set to post a loss of more than 100 million euros for the fiscal year that ended Jan. 31, due to rental increases of 50 million euros annually imposed by HBC, which is also Kaufhof’s main landlord. HBC does not break out individual divisions’ profit.

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Gross margin across the company fell 50 basis points to 39.7 per cent from a year earlier, largely due to declines in HBC’s European and off-price businesses, the company said.

As part of its effort to monetize its well-located real estate assets, the company has put its downtown Vancouver store, which it owns in a joint venture with Canadian retail property trust RioCan, up for sale. That follows the sale of its flagship Lord & Taylor building on Manhattan’s Fifth Avenue to Softbank-backed WeWork Companies Inc for US$850 million.

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