I've played it for a while and I thought I had encountered a bug at 4:58 (I've lost leather boots), but I rewatched from that part just now and apparently you just can lose equipment in this game, which forces you to just spam slime fight for a long time if you do not wish to gamble with a bit expensive equipment.
Which is a bit inconvenient, especially considering you can get unlucky even with good items in mercenary's backpack - there's % dodge chance and as you progress, there's even more % triggers (like Smite), but it might not be as bad as I think, because you can just farm 2nd mercenary and earn gold faster.