DUESSELDORF - Canadian retailer Hudson's Bay Co (HBC.TO) said on Wednesday it was committed to its European investments, even after activist investor Jonathan Litt urged it to take drastic steps to make more money from its assets.

"Our commitment to the German market and to our investments across Europe are stronger than ever," Chief Executive Jerry Storch said in a statement released in German.

"Even though the market for clothes and department stores globally is challenging and the business is developing at a slower pace than we hoped, we think long term."

Hudson's Bay denied speculation it was in talks about merging its German Kaufhof business with other German companies. There have been repeated rumours that Kaufhof could merge with Germany's other major department store chain, Karstadt.

Litt-controlled Land and Buildings on Monday pushed for Hudson's Bay, popularly called HBC, to sell its Saks Fifth Avenue brand and think of it more as a real estate investment, rather than just a department store.

Land & Building, which owns about a 5 per cent stake in Hudson's Bay, launched the campaign against HBC last month.

Hudson's Bay reiterated it plans to invest 1 billion euros (US$1.2 billion) in Kaufhof over the next five to seven years. It bought Kaufhof for 2.8 billion euros in 2015 from German retailer Metro.

On Wednesday, Wolfgang Link, chief executive of the business in Europe, said Hudson's Bay planned to modernise around 20 Kaufhof stores in 2018.

Litt is known to target companies he deems undervalued and in need of leadership or strategy changes. His attack on Hudson's Bay comes at a time when department store chains have been facing declining sales as customers go online to buy everything from clothes to groceries.