I'll add a slightly different perspective here. I spoke with some people who are a little closer to the editing side of the industry today, and one offered this perspective.
Deseret Book feels VERY threatened. Not by a rival bookstore, but by the Seagull book marketing philosophy. What they do (in the DB perception) is use DB books as their 'loss leaders.' In other words, they sell the DB books very cheaply (at cost, virtually) to draw people into the store. Then, they make money by selling those same people the Covenant books which appear discounted, but are actually produced in such a way that they're making full profit off of the 'discounted' books.
DB, then, is being undercut soundly on its own products. They have been loosing money big time lately (while they were once profitable) because nobody (in their opinion) buys their books at their stores--they go to Seagull and buy them because they're discounted so far.
This would all be fixed, of course, if the LDS publishers would adopt a more standard publishing format. You know, selling your books at a flat rate to everyone, not counting on your own retail stores to make your publishing company profitable, that sort of thing.