Can someone who knows retail sales answer this?

When a store gives a large markdown on an expensive item, are they losing money on the deal, or are they just pricing the item at a number that it should have been in the first place?

Example:

BestBuy has some large TVs on sale this week for $899 (sale price) – the price was originally $1999. So the ‘savings’ would be more than half the price.

My take is that their original markup (profit margin) was absurdly high, and that lowering this item’s price acknowledges that. They want to get rid of the stock, so the sale price ($899) is actually what the TV is worth (and close to what BestBuy paid for it wholesale).

Is that a fair way to look at it? Would a store sell something under its cost, just to get rid of it? Are stores price gouging customers who don’t buy items ‘on sale’?