Shortly after taking the top job at J.C. Penney Co. last fall, Chief Executive Ron Johnson signed up for the company's email alerts. He was shocked by what landed in his inbox.

The former Apple Inc. retail executive was deluged by sales announcements, sometimes two a day. He and his team counted 590 separate sales last year. They didn't bring in shoppers—Mr. Johnson's team found the average customer purchased only four times a year—but they did crush prices. Alarmingly, he learned nearly three-quarters of Penney's products sold at discounts of 50% or more.

Three months into the job, J.C. Penney Chief Executive Ron Johnson is planning a far-reaching but risky overhaul of the department store format. Dana Mattioli has details on The News Hub. Photo: AP

"I thought to myself, 'This is desperation,'" Mr. Johnson said.
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Now three months into his job, the new chief executive is hoping to turn things around with a far-reaching but risky overhaul of the department store format in an effort to lure consumers back to a chain that's often criticized as dowdy.

Mr. Johnson, who won plaudits for reinventing the retail experience with Apple stores' clean lines and empty space, laid out an ambitious plan Wednesday that involves carving stores into a warren of specialty shops, turning the high-traffic center selling space into an entertainment and hang-out area, and eschewing constant "sales" in favor of lower prices every day.

The idea is to make stores more inviting, highlight brand names and gain more control over pricing.
Penney's Changes

Beginning in February, Penney will lower the initial price for items by about 40% from where they start now. In tandem, he plans to sharply reduce the number of sales at the chain.
A number of in-season items will be on sale for an entire month. There will have two clearance sales, on the first and third Fridays of the month, called "Best Price Fridays."
The center of the store—where...