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People shop inside at the Hudson's Bay Company (HBC) flagship department store in Toronto on January 27, 2014.MARK BLINCH/Reuters

Hudson's Bay Co., which is cutting 2,000 jobs in its key North American retail business to help in its recovery efforts, is operating on the assumption that business will remain difficult.

The department-store retailer, whose first-quarter loss more than doubled from a year earlier, is overseeing a massive transformation aimed at eliminating layers of management, streamlining decision-making and making its operations more nimble. The cuts are targeted at saving more than $350-million, annually, by the end of fiscal 2018 and putting more of a focus on its digital business.

But Jerry Storch, chief executive officer of HBC, said on Friday he's making no predictions about when the initiatives will begin boosting the company's bottom line and sales.

"We aren't going to get into the game of talking about what's going to happen or not going to happen in terms of retail sales because, honestly, I don't think anyone could tell you that," he told a conference call with analysts.

Hudson's Bay, whose stock was down 10 per cent in early afternoon trading, is operating in a turbulent retail market as low-cost digital rivals steal business and stores are forced to close or reinvent themselves.

Department stores have been among the biggest victims of the sweeping changes as they take on more agile competitors that are rapidly lowering prices to lure customers.

Still, Richard Baker, executive chairman of HBC and a U.S. real estate titan, said the retailer is still looking to be a consolidator in the department-store industry and searching for other potential acquisitions. It acquired HBC in 2008, U.S.-based Saks Inc. in 2013 and Galleria Kaufhof in Germany in 2015.

"I continue to believe that there are opportunities around the world to create synergies and increase our market share in different markets," Mr. Baker said. "Obviously we have a lot to do here and we're very focused on it."

HBC considered acquiring U.S. rival Macy's Inc. earlier this year and, more recently, mulled an acquisition of debt-ridden Neiman Marcus Group Inc.

And HBC is still studying ways to benefit from the value of its significant real estate holdings, he said.

Mr. Baker has talked about spinning off HBC properties into publicly-traded real estate investment trusts. "That is a tougher situation today than it was six months ago" he said, seemingly referring to lower valuations of REITs. But he didn't rule it out either.

He said the company may take other actions, such as the sale of additional equity in HBC's joint ventures or real estate assets, depending on market conditions.

In its retail reinvention, Mr. Storch said HBC is building a business model to defend itself against future uncertainties and to play offence, with the goal of getting ahead of its competitors.

But even department stores' beauty counters – once considered untouchable in terms of heavy discounting – are feeling the squeeze of price cuts south of the border, he said.

Ten or 20 years ago, Baker said, retailers almost never marked down prices of cosmetics and fragrances. But with declining traffic and too many stores in the United States, discounting of beauty products is becoming more common in that market, he said.

"When your competitors do it, we have to do it," he said. "Once you get into that kind of a situation, everyone is fighting for every inch.

"We're in a brutally competitive environment in the United States right now," he said. "Stores are closing left and right … There will be fewer competitors – certainly fewer doors [stores] as you go forward. The market has to [be the] right size, supply and demand have to meet each other."

But he said HBC is not looking at closing stores, noting it has already pruned its worst ones. For its 50 Lord & Taylor stores in the United States, the problem, rather, is declining store traffic and fierce discounting. To fight those conditions, Lord & Taylor is focusing on its strengths, especially dresses and athletic wear, he said.

It's differentiating itself with products that are not available at rivals, like those from Bobbie Brown and Karl Lagerfeld.

"In the department store of the future, you are not going to win selling something all your competitors sell," Mr. Storch said.

He said staff cutbacks will not be accomplished "on the backs of the customer," but rather largely among back-office and middle management ranks, he said.

HBC said late Thursday its first-quarter loss climbed to $221-million or $1.21 a share, from $97-million or 53 cents, a year earlier. Its sales slipped to $3.2-billion from $3.3-billion.

The company expects to take one-time charges of about $95-million in the next year tied to the transformation efforts.

Among other leadership changes, HBC has appointed Alison Coville, an almost 20-year veteran of Hudson's Bay, as president of the Canadian chain. Liz Rodbell, who was president of Hudson's Bay and Lord & Taylor in the United States, will continue in the latter role.

HBC is moving back to its previous structure from several years ago of having separate management teams for each of Hudson's Bay and Lord & Taylor to handle different conditions in each of the Canadian and U.S. markets, Mr. Storch said.

He said Canada has been one of HBC's strongest segments. "We want to make sure we don't leave anything on the table in Canada."

HBC's same-store sales at all of its banners fell 2.9 per cent in its first quarter ended April 29, declining 2.4 per cent at its division which includes Hudson's Bay and Lord & Taylor. But the company said sales grew at Hudson's Bay, driven mainly by a strong digital business.

Same-store sales at Saks fell 4.8 per cent, a steeper decline than reported by U.S. rivals Macy's, Nordstrom Inc. and J.C. Penney Co. Inc. HBC's discount operations, Saks Off 5th and online website Gilt.com, fell 6.8 per cent, a fifth consecutive decline.

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