Yes, it can but not always!
When can refactoring improve design? Refactoring can improve design when team members who do refactoring are not only just programmers who know only language constructs but also are designers who know design principles. Team members who perform refactoring need to be experienced programmers. That is not enough. They need to know design principles in order to improve design. Else, they will not be able to figure out if the structure and association of entities or classes need to be changed in order to improve the design of software systems. They will focus only on a single program or subset of classes while refactoring.
Refactoring cannot improve design when we put programmers through a crash course on refactoring. It is essential to train them on object oriented analysis and design. They need to learn all design principles as well as programming principles. If we take this approach, yes, refactoring can improve design.
There can be extreme cases of dealing with complex or legacy code. Refactoring of legacy code is a costly affair. This requires experienced designers who have the ability to discover the hidden design.
In his article ‘Discovering Hidden Design’, Michael Feathers has articulated this very well with an example. It is a good read for all software professionals.