How to survive a retail meltdown

  @FortuneMagazine October 31, 2013: 6:53 AM ET
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The coming holiday season promises to be a rough one for big retailers. Companies like Wal-Mart, Kohl's, and Macy's have recently lowered their earnings guidance owing to a host of factors, including declining mall traffic, weak consumer confidence, and unseasonably warm weather. In response, retailers have been slashing prices to lure shoppers into their stores: UBS retail analyst Roxanne Meyer says that 80% of the retailers she covers are doing more promotions today than a year ago. Under the right circumstances, such discounting can boost market share and increase revenues. But when managed poorly, it can permanently damage a company's bottom line -- and should be a red flag for investors.

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