I recall back in the 80s tool snobs looked down their noses at Craftsman tools, calling them "crapsman", now those old tools are looked at with great nostalgia.
I agree that it's mostly homeowners/casual users who shop at HF, for a long time their whole image was cheap tools, some of which were OK quality, others not so much. Nothing I'd go for if I needed them to make my living either. Time will tell if their "upscaling" will pay off.
My reference to JC Penney was less upscaling than it was to doing away with their long time policy of constant sales, coupons and markdowns. When they got away from that, sales tanked...customers didn't think they were getting a bargain anymore. Of course they weren't doing well even before they adopted that policy, HF seems to be doing well business-wise.