JCPenney's desperation to get shoppers in stores could set off a promotional war in retail. 

Morgan Stanley analysts say that JCPenney is expected to put merchandise on sale to attract customers, activating a "panic button" within the retail industry. 

"We predict JCP will offer extremely deep discounts early in the season...putting pressure on other retailers to do the same," the analysts write in a recent report titled "Expect Coal: We Predict The Weakest Holiday Season Since 2008." 

The discounts could end up hurting retailers' profits. 

While customers have more money to spend on holiday gifts this year, they are hesitant because of Congressional discord and weaker consumer confidence, according to the report. 

JCPenney has been racing to get ahead for the lucrative holiday season. 

The company recently hired a new lead marketer who told AdAge that the retailer would have a "robust promotional schedule" this holiday. 

JCPenney's share price has tumbled nearly 70% in the past year. 

The company fired failed CEO Ron Johnson in April after his strategy to eliminate promotions and fill JCPenney with expensive merchandise alienated customers. 

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