@Stephen 2, etc., you're being pretty hard on this business owner.
Selling items at a loss is done pretty often, it's known as a "loss leader". The theory is the customers that use the coupon will buy some "full price" stuff, either on the same visit to the store or later, to make up those losses and then some.
A few risks of this approach:
* People don't buy at full price, business doesn't recoup initial losses.
* Business is short on cash, and even if they'd have a lot of repeat business, runs out of cash first. Doesn't sound like this owner went bankrupt, but losing a whole year's income is not too good.
* Regard some expense as fixed when it's not. This can turn a sale that would have made money into a fat loss. In other words, the business owner here may not have fallen into the "dot com fallacy" (lots of customers x loss on each customer = fat profits), instead she probably intended to make a small profit per sale, but figured her existing employees would just be busier (fixed cost) rather than having to hire extra temps and work late (variable cost).