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Stores Pay Price for Holiday Deals as Profit Forecasts Slip

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Retailers are starting to pay the price for a discounting binge that was deeper and longer than ever -- especially stores that cater to middle-income shoppers.

Look no farther than American Eagle Outfitters Inc. The clothier’s promotions helped boost sales in the past two months by 15 percent to $887 million. The teen retailer was forced to reduce its fourth-quarter profit forecast yesterday.