Just when you thought it could not get any worse, J.C. Penney one-ups itself.

Third-quarter 26 percent, bringing the two-year trend to a new low since CEO Ron Johnson started transforming the retailer into "America's Favorite Store." The company reported traffic has been consistent this year (down between 11 percent and 12 percent).

Yes, consistently bad, that is.

Conversion rates — changing shoppers into buyers — are also down. Gross margins missed because with a 26-percent decline in same-store sales, more clearance is unavoidable.

If you thought the whole "rip the Band-Aid coupon drug off" was going to hurt less going forward, think again. And that is why I have been talking about the likelihood of a 180 in strategy since the second-quarter call.

The real issue here is the lack of promotions. Retailers (including J.C. Penney) have the consumer well trained. They flash "for sale" signs or coupons and consumer traffic increases. But Johnson is trying to fight human nature and teach us about his idea of value perception with "Every Day Low Pricing."

The consumer is not having any part of this. Although the strategy is not working, Johnson is sticking with it — or is he?

Guess what? Penney announced it will have a "doozy" of a Black Friday sale. What? I thought you were sticking with the strategy? Oh, no, this will be a one-time thing. Investors expect it.

Ok. But what about the "Merry Christmas America" campaign to be announced on Monday? Sounds like another, dare I say, sale? And what do you call the recent email promo for $10 off? Oh, sorry that was a gift. Johnson also called it a tactic, not a strategy change.

I need to listen better. Johnson used an example that helped me clear it up. If he gives his son $10 in a birthday card it is not a coupon, it is a gift. To put the promotional debate to rest, Johnson suggested: "Call it what you want."

You can dress it up any way you like, but in my dictionary that is a discount.

Stacey Widlitz is the President of SW Retail Advisors Inc. She has worked at UBS, SG Cowen, Fulcrum Partners and in 2005 was one of three analysts to launch the Research Department at Pali Capital, where she covered Retail and Home Video for 5 years. Follow Stacey on Twitter @StaceyRetail.