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Saks had a quarter to forget, but Teachers has committed $500-million to back Hudson’s Bay’s planned takeover of the U.S. chain.

Richard Drew/AP

Department-store retailer Saks Fifth Avenue will arrive in Canada with a format designed specifically for this country that's even more upscale than its current U.S. stores.

Richard Baker, chief executive officer of Hudson's Bay Co., which acquired U.S.-based Saks Inc. last year, said on Tuesday the Canadian stores – up to seven mainstream ones in all – will have some distinct domestic touches, possibly luxury "food halls," when they arrive starting in 2016.

"We are relooking at every aspect of a U.S. Saks and modifying it in order to make it exciting, fun and interesting for Canadian luxury shoppers," Mr. Baker told reporters after the HBC annual meeting.

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Since acquiring Saks last November for $2.4-billion, Mr. Baker and his team have been working to make the chain even more high-end than it is today. He is betting he can convince wealthy shoppers to spend more of their fashion dollars in Canada rather than outside the country, as many of them often do.

He will be battling an increasingly crowded luxury retail field. U.S. department-store rival Nordstrom Inc. is set to open its first store in Canada this fall, while incumbent Holt Renfrew & Co. Ltd. is expanding its existing stores and giving them a more luxurious look.

Mr. Baker's strategy includes beefing up HBC's e-commerce at all its chains, which include its namesake Hudson's Bay in Canada and upscale Lord & Taylor south of the border. Since Saks is more advanced in its digital operations, he is counting on taking the store's online lessons to other parts of HBC.

He told reporters he thinks there are enough luxury shoppers who will start heading to Saks in Canada rather than shopping in other high-end stores in other markets.

He said his team is considering ways to adapt the Saks stores to the Canadian consumer, including opening its first "food halls," patterned on food offerings in the British luxury Harrods stores. Perhaps not coincidentally, he has hired a former Harrods executive, Marigay Mckee, to head up Saks. She was a key part of a makeover at Harrods.

Mr. Baker is looking at teaming up with another food purveyor to run the Saks food halls. The popular Italian-themed Eataly eatery and food retailer, which operates in New York and Chicago as well as Europe and Asia, is looking for space in Canada, sources have said. Mr. Baker had no comment about who he is considering.

Ms. Mckee has said she wants to introduce even higher end lines to Saks. Mr. Baker said on Tuesday he'd like to make them "uber luxurious stores with world class product and designers."

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In Canada "it could carry a different mix of vendors and have a different flavour to it – something uniquely Canadian," Mr. Baker added.

He also plans to introduce Saks's discount division to Canada, opening as many as 25 Off 5th outlets. Off 5th will be more like their U.S. stores, which the company is tweaking so that they are stocked with some less pricey labels, with clearer price tags on the merchandise to lure bargain-seeking customers.

Mr. Baker, who has overseen the transformation of HBC since he acquired it in 2008, has had an even broader effect on Canadian retailing. That's because he was instrumental in U.S. discounter Target Corp. deciding to launch its stores in Canada after HBC sold most of its Zellers leases to Target in 2011 for $1.8-billion.

However, Target has struggled in this country – some blaming its problems on a lack of expertise in the Canadian market. Mr. Baker has been careful to hire Canadian executives at Hudson's Bay.

Still, Mr. Baker told reporters he thinks Target will eventually recover in Canada. "Target is a very, very capable company," he said. "They will certainly work through the issues related to their Canadian stores. I would expect a very strong and profitable future for Target in Canada."

In its first quarter, Hudson's Bay's profit jumped to $176-million from a loss of $82-million a year earlier. Sales rose to $1.85-billion from $884-million.

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