It sounds like the perfect business school case study, and in the near future it might be. But today, it's what J.C. Penney CEO Ron Johnson is living through as he works to transform the J.C. Penney into what he hopes will be "America's favorite store."

It's the topic of his presentation at the annual luncheon sponsored by The Fashion Group International and The Robin Report in New York City today, and he sat down with me exclusively before he took the stage to talk about where J.C. Penney is on the 250th day of the transformation, and his vision for the future.

Seven hundred of J.C. Penney's 1,100 stores are in the process of being converted to a collection of "shops," resembling more of a collection of specialty stores than a traditional department store. But until today, Johnson has been mum about his plans for the 400 remaining, smaller footprint stores.

"We're doing a lot to drastically improve the product and the presentation for the customers that shop those 400 stores, and we're going to do it by Nov. 1," Johnson told CNBC. "We'll have new techniques that will make the shopping environment more exciting. We value those stores and those communities." (Read More: J.C. Penney — A Little Math Tempers Enthusiasm)

The same-store sales for J.C. Penney during the transformation have been worse than Johnson had anticipated. After the holidays, he expects it's going to get easier and J.C. Penney's sales will grow in the first quarter.

So how should Wall Street view next year's numbers against this year of transformation?

"I'm treating this like a start-up," Johnson said. "After this year, it's like starting over and that's how you'll have to look at the comparison. It's time to build loyalty through real value. If you're looking long-term [as an investor] there's a lot to like."

Those following the J.C. Penney transformation are divided, and it proved to be a point of conversation at this week's Value Investing Congress in New York City.

Activist investors like Pershing Square's Bill Ackman think Johnson's vision will transform more than just the store itself, but all of retail. Others, like T2 Partners' Whitney Tilson are looking for "conviction" to buy back shares of J.C. Penney, but don't have any of that reassurance right now.

Lloyd Khaner, general partner at Khaner Capital doesn't own any J.C. Penney shares, but does think it's a successful turnaround in the making. Khaner is closely monitoring J.C. Penney  among others in the midst of turnarounds and expects volatility in the short-term, and will buy when the debt-to-capital ratio falls.

When I asked him what his biggest lesson has been so far, he said it's understanding what customers want. Johnson admits J.C. Penney fumbled when it come to certain aspects of the pricing change in the beginning. (Read More: )

And when it comes to Black Friday, Johnson said, J.C. Penney will certainly participate, but in its "Fair & Square" way, J.C. Penney won't be the place shoppers go for extraordinary discounts. While he wasn't ready to give me details about the holiday strategy just yet, he said, "if you liked free haircuts for kids during back to school, you're going to love what we will announce Nov. 1 for the holidays."

Finally, I asked Johnson what his Christmas wish for J.C. Penney  is, and he replied immediately "[store] Traffic. If customers come into J.C. Penney enney, they'll love what they find."

-By Courtney Reagan, CNBC Reporter - Follow Courtney on Twitter @CourtReaganQuestions? Comments? Email us at consumernation@cnbc.com.