J.C. Penney Co. is expected to report its second consecutive quarterly loss and slumping sales, reflecting shopper confusion over its pricing strategy when it releases second-quarter financial results Friday.

WHAT TO WATCH FOR: Under its new CEO, former Apple Inc. executive Ron Johnson, J.C. Penney is transforming everything from prices to what it keeps in stock and the store experience. But concerns are growing about the company’s ability to turn its business around.

The riskiest move has been a bold pricing strategy implemented in February that eliminates hundreds of sales events in favor of more predictable everyday prices. Investors, who have been growing increasingly impatient, will want to know from Johnson how long the strategy will take to resonate with shoppers.

In fact, just six months after the mid-price department store chain implemented the approach that called for consistently lower daily prices, month-long sales and periodic discounts on merchandise throughout the year, Penney is making some adjustments.

Starting Aug. 1, Penney is eliminating one of the monthly sales and bringing back the word “clearance”. Penney is also tweaking its advertising to better communicate the pricing plan to customers.

The changes come as shoppers — and investors — have expressed confusion over Penney’s pricing strategy. In May, Penney’s stock plunged nearly 20 percent in its biggest decline in four decades after the retailer posted a larger-than expected quarterly loss and a 20 percent drop in total revenue as shoppers, used to seeing big discounts, went elsewhere. Revenue at stores open at least a year, a key measure of a retailer’s health, dropped 18.9 percent in the first quarter, much steeper than the 11.4 percent that Wall Street had expected.

The president and former Target Corp. executive Mike Francis, who was in charge of marketing the pricing strategy, abruptly left in June. With Francis’s departure, Johnson has assumed direct responsibility for and oversight of marketing and merchandising.

Penney has cautioned investors it will take time for the strategy to work, but the conference call following the earnings report on Friday will offer insight into how much they’re willing to wait. Penney is heading into the crucial stretch of the back-to-school selling season, the second most important period behind the winter holidays, and analysts will want to know whether it is seeing any signs of improvement.

J.C. Penney also is dramatically changing its selection of brands and the store experience. Starting Aug. 1, the chain is installing shops for Levi’s and its Arizona brand. The goal is to eventually install 100 shops inside the stores that will replace the sea of mixed clothing racks typical of department stores. It also plans spots in its stores called Town Squares, similar to Apple’s Genius Bars, which will offer services and advice. To attract customers, Penney is offering free haircuts for kids at its salons this month.

Analysts will want to know more details about its brand strategy and the Town Squares. They’ll also want to know whether Penney has slowed or canceled orders with its suppliers because of lagging sales.

In recent years, Penney has suffered because its core middle-income customers have been among those hardest hit by the weak economy. It’s also lagged behind rivals like Macy’s Inc. because it has failed to make its stores fun places to shop. But the big worry now is whether the pricing changes brought on by Johnson will actually work. Analysts now believe that Penney’s revenue at stores opened at least a year dropped 16.5 percent in the quarter, according to FactSet. In late June, analysts had expected the decline to be 14.7 percent.

Wall Street is also predicting a bigger loss and greater decline in total revenue than just a few weeks ago.

Investors, who initially sent Penney shares soaring 24 percent to about $43 after Johnson announced the pricing plan in late January, since have pushed them down about 40 percent since the beginning of the year. Shares are near $21 per share.

WHY IT MATTERS: Penney is a major department store chain and sells a variety of discretionary items at moderate prices. That makes it a barometer of middle-income shoppers’ willingness to spend. Furthermore, if the pricing plan does work, it has big implications for other retailers, which have been trying to figure out how to wean shoppers from rampant discounts.

WHAT’S EXPECTED: Analysts expect a loss of 26 cents on revenue of $3.2 billion.

LAST’S YEAR’S QUARTER: Adjusted earnings were 9 cents per share on revenue of $3.91 billion.