Asklemmy

I do not understand where they are making a profit

I think you're overestimating how much money it costs to produce this stuff. Economies of scale and certain other practices in this specific industry allow retailers to sell stuff at a significant markup even when it seems like they're giving customers a heavy discount.

But even with relatively large markup percentages, the low price point means retailers have to move incredible volumes in order to make enough money to stay open. So they end up using aggressive marketing tactics to get people to come in the door and start impulsively buying stuff.

My intuition is that those shirts are simply from last season and didn't sell well enough or they've gone out of fashion. The store is using it as an opportunity to put a big 80% off sign out front and whip potential customers into a frenzy. Could also be a scheme to recover costs from online returns. But I really doubt there is anything wrong or even different about those shirts.

Source: worked in clothing retail for a several years