I would expect the opposite to happen. What you just described is exactly why sales work. An item is perceived as being better because of it's price, but hey look, I've been lucky enough to get it for less than it's worth. I imagine this will just bring them down into more of a budget clothing line.

On the other hand, it could be that the JC Penny name will retain it's feel of being worth X, while costing X*0.6 so consumers really will feel like they're always getting a deal at JC Penny.