House of Fraser is beginning to see "green sprouts of recovery" but is still facing store closures next year, said owner Sports Direct.
Chief Executive Mike Ashley said "a lot of work has been done" to turn what was "an absolute disaster into a functional state".
Ashley's Sports Direct group bought the difficult chain of department stores in August 2018, and the tycoon previously blamed his former management for problems he described as "terminal."
But there was a more optimistic view of business when the group published half-yearly results.
President David Daly said: "We are beginning to see the sprouts of recovery as we continue to integrate business into the group."
It also reflected broader hopes on the streets after last week's general election.
"We hope the political waters will be calmer in the coming months, which will allow us to get out of this unpredictable period of the market," said Daly.
Equities rose 12% at the start of the trading session.
Sports Direct chief Mike Ashley said House of Fraser's stores will likely be reduced next year
The update came as shareholders prepared to vote on a proposal to change the group's name – which includes Sports Direct sportswear, as well as several other brands, including Flannels and Game Digital – for Frasers Group.
Ashley said the Fraser Chamber, which Sports Direct bought from the administration, was "dead, finished, destroyed."
He added: "It is only through the incredible efforts of the members of the Sports Direct group, including the remaining House of Fraser teams, that we are facing these problems and trying to build a business with a hopefully bright future.
"We are doing our best to realistically save as many jobs and stores as possible, yet despite our best efforts, there are still a number of stores that currently pay zero rent and are not profitable and therefore not sustainable.
"We continue to look at the long-term portfolio and expect the number of retained stores to continue to decline over the next 12 months."
Ashley said the House of Fraser store was safe "at least during Christmas."
The chain has closed seven stores since it was acquired by Sports Direct and now has 52.
December 2018: In full: Mike Ashley on the future of Main Street
Sports Direct's results for the six months to October 27 showed a 6% drop in underlying revenues, but a 15% increase in underlying profits as it increased margins as part of its "lift" strategy to boost luxury market.
Its "premium lifestyle" division, which now includes House of Fraser, posted an underlying half-year loss of £ 5.6 million, although it fell by £ 29 million a year ago.
The results also updated a tax claim of € 674 million from the Belgian authorities, first revealed in July.
The company said it "became fully involved" with the authorities, but hopes the issue "will not lead to relevant liabilities".