# FORM 10-Q

SECURITIES AND EXCHANGE
COMMISSION

Washington, DC 20549

(Mark One)

[X]    
          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
          OF 1934

For the quarterly period ended July 31,
2004

OR

[  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________ to _____________________

Commission file number  00019774

| | United Retail Group, Inc. (Exact name of registrant as specified in its charter)
| | --------------------------------------------------------------------------------

| |                                                               |                                     
| | ------------------------------------------------------------- | ------------------------------------
| | Delaware                                                      | 51-0303670                          
| | (State or other jurisdictionof incorporation or organization) | (I.R.S. employer identification no.)

365 West Passaic Street, Rochelle Park, New Jersey 07662(Address of principal executive offices) (Zip Code)

(201) 845-0880Registrant's telephone number, including area code

_______________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

---

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 (the Exchange Act)
during the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.

Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of
the Exchange Act).

# APPLICABLE ONLY TO
ISSUERS INVOLVED IN BANKRUPTCY

# PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:

Indicate
by check mark whether the registrant has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act subsequent to the distribution of
securities under a plan confirmed by a court.

# APPLICABLE ONLY TO
CORPORATE ISSUERS:

Indicate the
number of shares outstanding of each of the registrants classes of common stock, as
of the latest practicable date.

As
of July 31, 2004, 12,657,434 units, each consisting of one share of the registrants
common stock, $.001 par value per share, and one attached stock purchase right, were
outstanding. The units are referred to herein as shares.

---

PART I - FINANCIAL INFORMATION

ITEM I - FINANCIAL STATEMENTS

UNITED RETAIL GROUP, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(dollars in thousands)

|                                                        | ASSETS               | July 31,2004(Unaudited) | January 31,2004 | August 2,2003(Unaudited)
|------------------------------------------------------- | -------------------- | ----------------------- | --------------- | ------------------------
|Current Assets:                                         |                      |                         |                 |                         
|Cash and cash equivalents                               |                      | $18,366                 | $14,421         | $23,867                 
|Accounts receivable                                     |                      | 1,199                   | 1,789           | 1,255                   
|Inventory                                               |                      | 48,549                  | 49,054          | 44,902                  
|Prepaid rents                                           |                      | 4,704                   | 4,826           | 4,935                   
|Other prepaid expenses                                  |                      | 1,900                   | 2,044           | 2,395                   
|Total current assets                                    |                      | 74,718                  | 72,134          | 77,354                  
|                                                        |                      |                         |                 |                         
|Property and equipment, net                             |                      | 71,364                  | 76,710          | 82,950                  
|Deferred compensation plan assets                       |                      | 3,962                   | 4,893           | 4,217                   
|Trademarks, net of accumulated                          |                      |                         |                 |                         
|amortization of $421, $389 and $357                     |                      | 462                     | 493             | 525                     
|Other assets                                            |                      | 1,309                   | 1,465           | 1,477                   
|Total Assets                                            |                      | $151,815                | $155,695        | $166,523                
|                                                        |                      |                         |                
|                                                        | LIABILITIES          |                         |                 |                         
|Current liabilities:                                    |                      |                         |                 |                         
|Short-term distribution center financing                |                      | $664                    | $635            | $771                    
|Short-term capital leases                               |                      | 2,018                   | 2,086           | 2,032                   
|Accounts payable and other                              |                      | 22,708                  | 19,795          | 21,686                  
|Disbursement accounts                                   |                      | 8,992                   | 9,434           | 8,014                   
|Accrued expenses                                        |                      | 20,954                  | 21,737          | 20,683                  
|Total current liabilities                               |                      | 55,336                  | 53,687          | 53,186                  
|                                                        |                      |                         |                 |                         
|Long-term distribution center financing                 |                      | 2,987                   | 3,326           | 3,650                   
|Long-term capital leases                                |                      | 2,661                   | 3,646           | 4,712                   
|Deferred compensation plan liabilities                  |                      | 4,519                   | 4,893           | 4,217                   
|Other long-term liabilities                             |                      | 10,708                  | 10,123          | 10,459                  
|Total liabilities                                       |                      | 76,211                  | 75,675          | 76,224                  
|                                                        | STOCKHOLDERS' EQUITY |                         |                 |                         
|Preferred stock, $.001 par value; authorized            |                      |                         |                 |                         
|1,000,000 shares; none issued                           |                      |                         |                 |                         
|Series A junior participating preferred stock           |                      |                         |                 |                         
|$.001 par value; authorized 150,000 shares; none issued |                      |                         |                 |                         
|Common stock, $.001 par value; authorized               |                      |                         |                
|30,000,000 shares; issued 14,248,200 shares             |                      | 14                      | 14              | 14                      
|Additional paid-in capital                              |                      | 84,853                  | 83,696          | 83,696                  
|Retained earnings                                       |                      | (936)                   | 3,986           | 14,265                  
|Treasury stock                                          |                      |                         |                 |                         
|(1,590,766, 1,310,906 and 1,310,906 shares) at cost     |                      | (8,327)                 | (7,676)         | (7,676)                 
|Total stockholders' equity                              |                      | 75,604                  | 80,020          | 90,299                  
|Total liabilities and stockholders' equity              |                      | $151,815                | $155,695        | $166,523                

The accompanying notes are an integral part of the Consolidated Financial Statements.

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UNITED RETAIL GROUP, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(dollars in thousands, except per share amounts)(Unaudited)

|                              | Thirteen Weeks Ended | Twenty-Six Weeks Ended |            |           
|----------------------------- | -------------------- | ---------------------- | ---------- | ----------
|
|Net sales                     | $101,269             | $104,790               | $198,788   | $206,320  
|                              |                      |                        |            |           
|Cost of goods sold, including |                      |                        |            |           
|buying and occupancy costs    | 80,415               | 83,119                 | 157,060    | 162,480   
|                              |                      |                        |            |           
|Gross profit                  | 20,854               | 21,671                 | 41,728     | 43,840    
|                              |                      |                        |            |           
|General, administrative and   |                      |                        |            |           
|store operating expenses      | 23,600               | 25,616                 | 47,572     | 51,996    
|                              |                      |                        |            |           
|Operating loss                | (2,746)              | (3,945)                | (5,844)    | (8,156)   
|                              |                      |                        |            |           
|Interest income               | 1,193                | 45                     | 1,207      | 55        
|Interest expense              | (190)                | (257)                  | (420)      | (519)     
|                              |                      |                        |            |           
|Loss before income taxes      | (1,743)              | (4,157)                | (5,057)    | (8,620)   
|                              |                      |                        |            |           
|(Benefit from) provision      |                      |                        |            |           
|for income taxes              | (184)                | 89                     | (135)      | 171       
|                              |                      |                        |            |           
|Net loss                      | ($1,559)             | ($4,246)               | ($4,922)   | ($8,791)  
|                              |                      |                        |            |           
|Net loss per share            |                      |                        |            |           
|Basic                         | ($0.12)              | ($0.33)                | ($0.38)    | ($0.68)   
|Diluted                       | ($0.12)              | ($0.33)                | ($0.38)    | ($0.68)   
|                              |                      |                        |            |           
|Weighted average number of    |                      |                        |            |           
|shares outstanding            |                      |                        |            |           
|Basic                         | 12,742,459           | 12,937,304             | 12,839,882 | 12,937,304
|Common stock equivalents      |                      |                        |            |           
|(stock options)               | 0                    | 0                      | 0          | 0         
|Diluted                       | 12,742,459           | 12,937,304             | 12,839,882 | 12,937,304

The accompanying notes are an integral part of the Consolidated Financial Statements.

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UNITED RETAIL GROUP, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(dollars in thousands)(Unaudited)

|                                                        | Twenty-Six Weeks Ended |         
|------------------------------------------------------- | ---------------------- | --------
|
|Cash Flows From Operating Activities:                   |                        |         
|Net loss                                                | ($4,922)               | ($8,791)
|Adjustments to reconcile net loss to net cash           |                        |         
|provided by operating activities:                       |                        |         
|Depreciation and amortization of property and equipment | 5,912                  | 6,289   
|Amortization of deferred charges and other              |                        |         
|intangible assets                                       | 251                    | 255     
|Loss on disposal of assets                              | 40                     | 276     
|Deferred compensation (income) expense                  | (145)                  | 95      
|Unrealized loss on deferred compensation plan assets    | 51                     | -       
|Deferred lease assumption revenue amortization          | (2)                    | (21)    
|Changes in operating assets and liabilities:            |                        |         
|Accounts receivable                                     | 590                    | 1,739   
|Income taxes                                            | 32                     | 1,246   
|Inventory                                               | 505                    | 16,667  
|Accounts payable and accrued expenses                   | 1,973                  | (4,559) 
|Prepaid expenses                                        | 266                    | (68)    
|Other assets and liabilities                            | 521                    | 587     
|Net Cash Provided by Operating Activities               | 5,072                  | 13,715  
|                                                        |                        |         
|Investing Activities:                                   |                        |         
|Capital expenditures                                    | (606)                  | (1,795) 
|Deferred payment for property and equipment             | 127                    | 58      
|                                                        |                        |         
|Net Cash Used in Investing Activities                   | (479)                  | (1,737) 
|                                                        |                        |         
|Financing Activities:                                   |                        |         
|Repayments of long-term debt                            | (310)                  | (760)   
|Payments on capital lease obligations                   | (1,053)                | (983)   
|Decrease in disbursement accounts                       | (442)                  | (3,908) 
|Internal Revenue Service settlement related to warrants | 1,157                  | -       
|Issuance of short-term debt                             | -                      | 290     
|Repayments of short-term debt                           | -                      | (290)   
|                                                        |                        |         
|Net Cash Used in Financing Activities                   | (648)                  | (5,651) 
|                                                        |                        |         
|Net increase in cash and cash equivalents               | 3,945                  | 6,327   
|Cash and cash equivalents, beginning of period          | 14,421                 | 17,540  
|Cash and cash equivalents, end of period                | $18,366                | $23,867 

The accompanying notes are an integral part of the Consolidated Financial Statements.

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UNITED RETAIL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The consolidated financial statements
include the accounts of United Retail Group, Inc. and its subsidiaries (the
Company). All significant intercompany balances and transactions have been
eliminated.

The consolidated financial statements
as of and for the thirteen and twenty-six weeks ended July 31, 2004 and August 2, 2003 are
unaudited and are presented pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, the consolidated financial statements should be read in
conjunction with the financial statement disclosures contained in the Companys 2003
Annual Report and 2003 Form 10-K. In the opinion of management, the accompanying
consolidated financial statements reflect all adjustments necessary to present fairly the
financial position and results of operations and cash flows for the interim periods, but
are not necessarily indicative of the results of operations for a full fiscal year.

Certain prior year balances have been
reclassified to conform with the current year presentation.

2. Net Loss Per Share

Basic per share data has been
computed based on the weighted average number of shares of common stock outstanding.
Diluted per share data has been computed on the basic shares because for the thirteen and
twenty-six weeks ended July 31, 2004 and August 2, 2003, the effect of stock options is
anti-dilutive.

Options to purchase shares of common
stock which were not included in the computation of diluted per share data were as
follows:

|                                 | Thirteen Weeks Ended | Twenty-Six Weeks Ended |                |               
|-------------------------------- | -------------------- | ---------------------- | -------------- | --------------
|
|Options                          | 1,927,772            | 1,812,912              | 1,927,772      | 1,812,912     
|Range of option prices per share | $1.80 - $15.13       | $2.25 - $15.13         | $1.80 - $15.13 | $2.25 - $15.13

The Company uses the intrinsic value
method to account for stock-based compensation in accordance with Accounting Principles
Board Opinion No. 25, Accounting For Stock Issued To Employees (Opinion No.
25) and has adopted the disclosure provisions of Statement of Financial Accounting
Standards (SFAS) No. 123, Accounting For Stock-Based Compensation. Under
Opinion No. 25, compensation expense, if any, is measured as the excess of the market
price of the stock over the exercise price on the measurement date. In accordance with
Opinion No. 25, compensation expense is recorded ratably over the five-year vesting period
of the options.

The following table illustrates the
effect on net loss and loss per share if the Company had applied the fair value
recognition provisions of SFAS No. 123, Accounting For Stock-Based
Compensation to stock-based employee compensation:

|                                   | Thirteen Weeks Ended | Twenty-Six Weeks Ended |          |         
|---------------------------------- | -------------------- | ---------------------- | -------- | --------
|
|Reported net loss                  | ($1,559)             | ($4,246)               | ($4,992) | ($8,791)
|Add back: Compensation expense     | -                    | 17                     | -        | 95      
|Deduct: Total stock-based          |                      |                        |          |         
|employee compensation              |                      |                        |          |         
|expense determined under fair      |                      |                        |          |         
|value based method for all         |                      |                        |          |         
|awards, net of related tax effects | (42)                 | (99)                   | (117)    | (168)   
|                                   |                      |                        |          |         
|Pro forma net loss                 | ($1,601)             | ($4,328)               | ($5,109) | ($8,864)
|                                   |                      |                        |          |         
|Loss per share:                    |                      |                        |          |         
|Basic - as reported                | ($0.12)              | ($0.33)                | ($0.38)  | ($0.68) 
|Basic - pro forma                  | ($0.13)              | ($0.33)                | ($0.40)  | ($0.69) 
|                                   |                      |                        |         
|Diluted - as reported              | ($0.12)              | ($0.33)                | ($0.38)  | ($0.68) 
|Diluted - pro forma                | ($0.13)              | ($0.33)                | ($0.40)  | ($0.69) 

3. Financing Arrangements

In 1993, the Company executed a
ten-year $7.0 million note bearing interest at 7.3%. Interest and principal were payable
in equal monthly installments beginning November 1993. Final payment on this note was made
in October 2003.

In 1994, the Company executed a
fifteen-year $8.0 million loan bearing interest at 8.64%. Interest and principal are
payable in equal monthly installments beginning May 1994. The loan is collateralized by a
mortgage on the national distribution center owned by the Company in Troy, Ohio.

The Company and certain of its
subsidiaries (collectively, the Companies) are parties to a Financing
Agreement, dated August 15, 1997 (the Financing Agreement), with The CIT
Group/Business Credit, Inc.(CIT). The Financing Agreement was extended and
expanded during fiscal 2003. The term was extended three years to August 15, 2008. The
line of credit was increased from $40 million to $50 million for the Companies, subject to
availability of credit according to a borrowing base computation. The line of credit may
be used on a revolving basis by any of the Companies to support trade letters of credit
and standby letters of credit and to finance loans.

The Companies are required to
maintain unused at all times combined asset availability of at least $5 million. Except
for the maintenance of a minimum availability of $5 million and a limit on capital
expenditures, the Financing Agreement does not contain any significant financial
covenants.

The Financing Agreement also includes
certain restrictive covenants that impose limitations (subject to certain exceptions) on
the Companies with respect to, among other things, making certain investments, declaring
or paying dividends, making loans, engaging in certain transactions with affiliates, or
consolidating, merging or making acquisitions outside the ordinary course of business.

In the event a loan is made to one of
the Companies, interest is payable monthly based on a 360-day year at the Chase Manhattan
Bank prime rate plus incremental percentages ranging from 0.00% to 0.75% or LIBOR rate
plus incremental percentages ranging from 1.75% to 2.50% as determined by the average
excess availability each month per the Financing Agreement on a per annum basis. The
borrower can select either the prime rate or the LIBOR rate as the basis for determining
the interest rate.

The line of credit is collateralized
by a security interest in i) inventory and its proceeds ii) bank credit card receivables
and iii) the balance on deposit from time to time in a bank account that has been pledged
to the lenders.

At July 31, 2004, the borrowing
capacity of the Companies under the Financing Agreement with CIT, after satisfying the $5
million minimum availability requirement, was $7.2 million, trade letters of credit for
the account of the Companies were outstanding in the amount of $27.0 million, standby
letters of credit were outstanding in the amount of $6.1 million and no loan from CIT was
outstanding. The Companys cash and cash equivalents of $18.4 million were
unrestricted.

In January 2002, the Company executed
a five-year $8.2 million sale and lease back agreement for certain fixtures in new and
remodeled stores. The lease bears an interest rate of 7.0% per annum. The Company was
required to pay sales tax as part of the agreement. The agreement provides for equal
monthly rent payments beginning February 2002 and gives the Company the option of buying
back the fixtures at the end of the term for a nominal price.

Between January 2002 through January
2003, the Company executed a series of three-year capital lease agreements for call center
systems at the Companys national distribution center in Troy, Ohio, bearing interest
at rates between 6.09% to 6.64% per annum aggregating approximately $1.4 million. The
Company has the option of buying the systems at the end of the term for a nominal price.

4. Income Taxes

In November 2003, the Company agreed
in principle with the Internal Revenue Service (IRS) on a settlement and the
closure of its examination of the Companys tax returns for the years through 1996.

In November 2003, the Company also
agreed in principle with the IRS on the settlement of a matter related to tax refund
claims the Company had filed for research credits and for deductions attributable to
certain bank financing transactions during 1989 to 1992. In April 2004, the Company
received payment from the IRS in the amount of $2.5 million which was initially deferred
on the balance sheet. The Company has recently received final clearance from the IRS
regarding this amount. Consequently, the Company has recognized the benefit of the refund
claims, including the related interest thereon during the second fiscal quarter of 2004.
$1.1 million was recorded as an increase to additional paid-in capital as it related to
stock warrant deductions, $1.2 million of interest income was recorded in the
Companys results of operations and $0.2 million in federal tax benefit was recorded
related to research credits. An additional payment of approximately $0.3 million was
received in August 2004 in connection with further claims related to research credits.

The Company recorded a $7.3 million
non-cash charge to establish a valuation allowance for its net deferred tax assets and net
operating loss carryforwards in the fourth quarter of fiscal 2002. The valuation allowance
was calculated in accordance with the provisions of SFAS No. 109, Accounting for
Income Taxes (SFAS No. 109), which places significant importance on the
Companys cumulative operating results in the most recent three-year period when
assessing the need for a valuation allowance. The Companys cumulative loss in the
three-year period ended February 1, 2003, which included the net loss reported in the
fourth quarter of fiscal 2002, was sufficient to require a full valuation allowance under
the provisions of SFAS No. 109. The Company recorded additional valuation allowances of
$12.6 million and $2.6 million in the fiscal year ended January 31, 2004 and twenty-six
week period ended July 31, 2004, respectively. The Company intends to maintain a valuation
allowance for its net deferred tax assets and net operating loss carryforwards until
sufficient positive evidence exists to support its reversal.

5. Stock Appreciation
Rights Plan

Commencing in May 2000 and annually
thereafter, each nonmanagement Director received an award under the Companys Stock
Appreciation Rights Plan that provides for a cash payment by the Company when the Director
exercises the stock option granted to him contemporaneously under the Companys Stock
Option Plans. The payment will be an amount equivalent to the after tax equity in the
option that is being exercised, that is, the excess of the then current market price of
the shares issued over the exercise price of the corresponding option plus any personal
income tax withholding on the gain arising from the exercise.

6. Supplemental Cash
Flow Information



Net cash flow from operating
activities reflects cash payments for interest and income taxes as follows (dollars in
thousands):

|                                                                                                                   | Thirteen Weeks Ended | Twenty-Six Weeks Ended |        |       
|------------------------------------------------------------------------------------------------------------------ | -------------------- | ---------------------- | ------ | ------
|
|Net cash interest income (expense)   received (paid), including   interest income of $1,193, $45,   $1,207 and $55 | $971                 | ($249)                 | $778   | ($505)
|Net income taxes refunded                                                                                          | $1,339               | $1,114                 | $1,324 | $1,075

Non-cash financing activities include
the acquisition of 279,870 shares of Company common stock within the deferred compensation
plan in the second quarter of fiscal 2004 which cost $651,000 and is reflected as a
reduction in equity in the balance sheet.

7. Contingencies

The Company is involved in legal
actions and claims arising in the ordinary course of business. Management believes (based
on advice of legal counsel) that such litigation and claims, net of reserves, will not
have a material adverse effect on the Companys financial position, annual results of
operations or annual cash flows.

In addition, on May 1, 2003, a suit
in California Superior Court, Los Angeles County, styled Erik Stanford vs. United
Retail Incorporated was served on the Company by a former store manager in California.
On March 3, 2004, an amended complaint was served that added another plaintiff. The suit
is purportedly a class action on behalf of certain current and former associates in
California in the previous four years.

The plaintiffs in the Stanford
case assert state wage and hour claims.

The Company intends to oppose class
certification strongly and to defend the Stanford case vigorously on the merits at
trial, which is likely to be scheduled to take place after fiscal 2004. However, the
plaintiffs have raised the possibility of settlement (without making a specific settlement
demand) and the Company intends to participate in mediation proceedings to resolve the
matter. Mediation is scheduled for the third quarter of fiscal 2004 but might extend
beyond then.

Although counsel is unable to predict
the ultimate outcome of the Stanford case, management does not believe that the
case will have a material impact on the Companys financial position. However, given
the uncertainty at this stage, it is possible that if either an adverse judgment for
damages is rendered or a negotiated settlement is agreed upon, the amount payable could be
material to the Companys annual cash flows. Further, the amount payable, net of
reserves, could be material to the Companys results of operations for the fiscal
year in which the matter is resolved.

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# ITEM 2.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.

EXECUTIVE SUMMARY

Introduction

The Executive Summary section of
Managements Discussion and Analysis of Financial Condition and Results of Operations
provides a high level summary of the more detailed information elsewhere in this Report,
an overview to put this information in context and a plan to return the Company to
long-term profitability. This section is also an introduction to the discussion and
analysis that follows. Accordingly, it necessarily omits details that appear elsewhere in
this Report. It should not be relied upon separately from the balance of this Report.

Products and Purchasing

United Retail Group, Inc. and its
subsidiaries (collectively, the Company) is a leading specialty retailer
featuring its proprietary AVENUE® brand large size (14 or larger) womens wearing
apparel. It also offers AVENUE BODY® brand large size womens undergarments and
lingerie, CLOUDWALKERS® brand womens footwear and AVENUE® brand large size
womens hosiery, as well as AVENUE® brand accessories and gifts.

Most of the Companys products
are made for the Company by contract manufacturing abroad.

Customer Base

The Company serves the mass market in
the United States and targets fashion conscious women between 25 and 55 years of age who
wear large size apparel. Management believes that the number of women in this age range
who wear large size apparel has increased in recent years.

Merchandising and Marketing

Design is an important aspect of the
Companys apparel. Many AVENUE® and AVENUE BODY® products are custom
designed. The Company emphasizes a contemporary brand image and consistency of merchandise
quality and fit.

The Company uses direct mail, credit
card statement inserts, in-store signage and e-mail messages in its marketing activities
and plans to use print media selectively.

Channel of Distribution

The Companys channel of
distribution is retail stores using its AVENUE® trade name. It leases 530 stores in 37
states, principally in strip shopping centers. The Company also operates a website at
www.avenue.com that sells a selection of the merchandise that is also on sale in the
stores.

Until March 2003, the Company also
mailed catalogs that featured a merchandise selection that included both items in the
stores and similar products. (The website and the catalog, while it was in existence, are
referred to as the shop@home business.)

Increased Competition

The womens retail apparel and
shoe industries are highly competitive. Operating results of businesses in these
industries, especially businesses that emphasize fashionable merchandise, can vary
materially from time to time. The Companys competition includes other specialty
retailers, mass merchants, department stores, discount stores, mail order companies,
television shopping channels and Internet websites. Management believes that total sales
of large size womens apparel from these sources of supply increased in recent years.
Among specialty retailers for large size women like the Company, the competition includes
large store chains that have announced long-term store growth plans to aggressively expand
into additional strip shopping center locations.

Deflationary Price Trend
in Apparel Industry

The Consumer Price Index published by
the U.S. Dept. of Labor, Bureau of Labor Statistics city average for womens and
girls apparel (the CPI) declined 5.0% in fiscal 2001, 1.9% in fiscal
2002 and 1.8% in fiscal 2003. There is no assurance that this deflationary trend will not
continue.

Company Sales Fluctuations

Sales figures and merchandise margins
are central to regaining the Companys profitability. The Company conducts a weekly
interdisciplinary review of sales and merchandise margins and prepares budgets for two
six-month seasons each year, the Spring season and the Fall season. Management uses
comparable store sales (for stores open at least 12 months at the time) as an analytical
tool. However, there is no industry standard for calculating comparable store sales and
the Companys approach may differ from those of competitors.

Seasonal sales and CPI data follows:

|                                 | 2001   | 2002   | 2003   | 2004   |        |        |       
|-------------------------------- | ------ | ------ | ------ | ------ | ------ | ------ | ------
|
|Total store sales ($ millions)*  | $208.8 | $206.7 | $225.1 | $198.7 | $203.5 | $187.7 | $196.0
|                                 |        |        |        |        |        |        |       
|Sales per average store ($000's) | $393   | $373   | $406   | $356   | $371   | $344   | $368  
|                                 |        |        |        |        |        |        |       
|Average number of stores         | 532    | 554    | 555    | 558    | 548    | 545    | 532   
|                                 |        |        |        |        |        |        |       
|Comparable store sales           | -3.4%  | -2.1%  | +3.2%  | -5.3%  | -9.3%  | -4.2%  | -2.2% 
|                                 |        |        |        |        |        |        |       
|Six-month CPI**                  | -3.4%  | -1.6%  | -1.9%  | 0.0%   | -1.4%  | -0.4%  | +0.4% 

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* Excluding shop@home
sales**U.S. Dept. of Labor, U.S. City Average, Womens and Girls Apparel (for
          2004, January through June)

Operating Results

The declines in sales per average
store from Spring 2001 to Fall 2003 adversely affected operating results.

The Company had net income of $0.4
million in fiscal 2001 and incurred net losses of $23.1 million in fiscal 2002 and $19.1
million in fiscal 2003 and $4.9 million in Spring 2004. The Company had operating income
of $0.6 million in fiscal 2001 and incurred operating losses of $22.8 million in fiscal
2002 and $18.8 million in fiscal 2003 and $5.8 million in Spring 2004.

In order to absorb normal cost
inflation and return to long-term profitability, it will be necessary for the Company to
increase sales per average store to levels better than in fiscal 2001 with merchandise
margins at least as high.

Product Repositioning Plan

In the womens retail specialty
apparel industry, sales, especially in businesses that emphasize fashionable merchandise,
can vary significantly over time. Sales are volatile because of shifts in consumer
spending patterns, consumer preferences and overall economic conditions; the impact of
competition; variations in weather patterns; fluctuations in consumer acceptance of
products; changes in the ability to develop new merchandise; differences in promotional
strategies; and movements in consumer confidence levels. These variables caused the
Companys sales per average store to fluctuate in the past. Thus, recent sales
performance is not necessarily indicative of future sales performance. As a result,
management believes that long-term sales projections within a defined narrow range are not
reliable.

After fiscal 2001, when net income
declined to $0.4 million, the Company incurred net losses. Since then, the Company has
sought to absorb normal cost inflation and return to long-term profitability through a
goal of sales per average store better than in fiscal 2001 with merchandise margins at
least as high. This unrealized financial goal was translated early in fiscal 2003 into an
integrated operational plan designed to reposition the Companys product offering.
This plan has four principal components: (i) to improve the design of the Companys
merchandise and thereby differentiate it from competitors merchandise, (ii) to
market more items together as coordinated outfits rather than separately as individual
garments, (iii) to put more emphasis on fashionable merchandise and less on basic items,
and (iv) to raise the level of merchandise presentation in the store to make shopping
easier and to encourage outfit buying. This plan relies primarily on the Companys
intellectual capital. Only small amounts of financial capital are required to execute the
plan.

This section constitutes
forward-looking information under the Reform Act, which is subject to the uncertainties
and other risk factors referred to under the caption Future Results.

Fluctuation in Store Count

Store counts averaged 543, 557 and
546, respectively, for fiscal 2001, 2002 and 2003 and 532 for Spring 2004. In Spring 2004,
the Company opened no stores and closed five stores as part of its normal lease
maintenance program. The average number of stores is expected to decline further in Fall
2004.

The annual capital expenditure
budgets after fiscal 2004 will provide for new store construction and other infrastructure
development priorities. Prioritization will be based, among other things, on overall
profitability and the availability of suitable locations at rents and on terms that fit
the Companys financial model for new store construction. This paragraph constitutes
forward-looking information under the Reform Act, which is subject to the uncertainties
and other risk factors referred to under the caption Future Results.

Liquidity

United Retail Group, Inc. and certain
of its subsidiaries (collectively, the Companies) are parties to a Financing
Agreement, dated August 15, 1997, as amended (the Financing Agreement), with
The CIT Group/Business Credit, Inc. (CIT). The Financing Agreement provides
credit on a revolving basis.

The Companys historical sources
of liquidity have been the availability of credit under the Financing Agreement on a
revolving basis and short-term trade credit, as well as its cash on hand and net cash
provided by operating activities. Management believes that the sources of liquidity
mentioned in the preceding sentence will continue to be adequate to meet the
Companys cash requirements to conduct operations in the Fall 2004 season and the
Spring 2005 season, respectively, in a manner consistent with the comparable seasonal
operating results in the previous year. However, in the event the Company incurs an
operating loss in Fall 2004 materially higher than in Fall 2003 or in Spring 2005
materially higher than in Spring 2004, additional sources of liquidity might be required.
This paragraph contains forward-looking information under the Reform Act and is subject to
the uncertainties and other risk factors referred to under the caption Future
Results.

The Companys cash requirements
include, among other things, (i) anticipated working capital needs, including seasonal
inventory financing, (ii) financing activities, including payments due on its principal
contractual obligations, (iii) investing activities, including costs for building stores
and replacing fixtures where appropriate and (iv) litigation costs.

DISCUSSION AND ANALYSIS

(The following two sections
provide details about the material line items in the Companys statements of
operations.)

Second Quarter of Fiscal
2004 Versus Second Quarter of Fiscal 2003

Net sales for the second quarter of
fiscal 2004 decreased 3.4% from the second quarter of fiscal 2003, to $101.3 million from
$104.8 million, principally from lower prices. Comparable store sales for the second
quarter of fiscal 2004 decreased 2.2%. (Comparable store sales are at stores that were
open at least 12 months; this measure of sales performance is used by management to filter
out the generally unrepresentative sales results of new stores.) Average number of stores
decreased from 546 to 532. See, Stores.

Gross profit decreased to $20.9
million in the second quarter of fiscal 2004 from $21.7 million in the second quarter of
fiscal 2003 decreasing as a percentage of net sales to 20.6% from 20.7%. Gross profit as a
percentage of net sales decreased principally because of higher marketing expenses. Gross
profit levels in the future will be subject to the uncertainties and other risk factors
referred to under the caption Future Results.

General, administrative and store
operating expenses decreased to $23.6 million in the second quarter of fiscal 2004 from
$25.6 million in the second quarter of fiscal 2003 decreasing as a percentage of net sales
to 23.3% from 24.4%. The percentage decrease was principally because of lower expenses for
self-insured employee healthcare benefits and workers compensation benefits in the
current quarter.

The Company incurred operating losses
of $2.7 million in the second quarter of fiscal 2004 and $3.9 million in the second
quarter of the previous year.

Interest income was $1.2 million in
the second quarter of fiscal 2004, principally as a result of the recognition of interest
from the Internal Revenue Service on the settlement of certain tax claims asserted by the
Company. During the quarter, the Company received final clearance from the IRS on the
settlement. The claims related to deductions attributable to stock purchase warrants used
in bank financing transactions prior to 1993 and to research credits. Interest income was
$45,000 in the second quarter of fiscal 2003.

The Companys effective tax rate
was 10.6% for the second quarter of fiscal 2004 and (2.1%) for the second quarter of
fiscal 2003. The primary factor contributing to this rate in each period was the valuation
allowance provided for the Companys net operating loss (NOL)
carryforwards and other net deferred tax assets. The tax valuation allowance was increased
by $1.2 million in the second quarter of fiscal 2004 and by $1.9 million in the second
quarter of fiscal 2003.

The benefit from income taxes was
$0.2 million for the second quarter of fiscal 2004, principally from $0.2 million for
research credits included in the IRS settlement. The provision for income taxes was $0.1
million for the second quarter of fiscal 2003, primarily representing state taxes.

The Company incurred net losses of
$1.6 million in the second quarter of fiscal 2004 and $4.2 million in the second quarter
of fiscal 2003.

See, Critical Accounting
Policies for a discussion of estimates made by management in preparing financial
statements in accordance with generally accepted accounting principles.

First Half of Fiscal 2004
Versus First Half of Fiscal 2003

Net sales for the first half of
fiscal 2004 decreased 3.7% from the first half of fiscal 2003, to $198.8 million from
$206.3 million, principally from lower prices. Comparable store sales for the first half
of fiscal 2004 decreased 2.2%. Average number of stores decreased from 548 to 532.

Gross profit decreased to $41.7
million in the first half of fiscal 2004 from $43.8 million in the first half of fiscal
2003 decreasing as a percentage of net sales to 21.0% from 21.2%. Gross profit as a
percentage of net sales decreased principally because of higher freight costs, partially
offset by reduced inventory shrinkage.

General, administrative and store
operating expenses decreased to $47.6 million in the first half of fiscal 2004 from $52.0
million in the first half of fiscal 2003 decreasing as a percentage of net sales to 23.9%
from 25.2%. The percentage decrease was principally because of lower expenses for
self-insured workers compensation benefits and employee healthcare benefits in the
current half.

The Company incurred operating losses
of $5.8 million in the first half of fiscal 2004 and $8.2 million in the first half of the
previous year.

The Companys effective tax rate
was 2.7% for the first half of fiscal 2004 and (2.0%) for the first half of fiscal 2003.
The tax valuation allowance was increased by $2.6 million in the first half of fiscal 2004
and by $4.0 million in the first half of fiscal 2003.

The benefit from income taxes was
$0.1 million for the first half of fiscal 2004. The provision for income taxes was $0.2
million for the first half of fiscal 2003, primarily representing state taxes.

The Company incurred net losses of
$4.9 million in the first half of fiscal 2004 and $8.8 million in the first half of fiscal
2003.

August Sales Results

Net sales for August 2004 decreased 3.2% from August 2003, to $24.1 million from $24.9 million.  Comparable store sales for the month decreased 2.1%.  The fiscal month of August 2003 included the Saturday before the Labor Day holiday.  The fiscal month of August
2004 ended before the Labor Day weekend.  Accordingly, the Companys current sales performance versus
last year can be measured more accurately when comparable store sales data for the two-month period of August and
September combined becomes available.

Increased Competition

The womens retail apparel and
shoe industries are highly competitive. Operating results of businesses in these
industries, especially businesses that emphasize fashionable merchandise, can vary
materially from time to time. The Companys competition includes other specialty
retailers, mass merchants, department stores, discount stores, mail order companies,
television shopping channels and Internet websites. Management believes that total sales
of large size womens apparel from these sources of supply increased in recent years.
Among specialty retailers for large size women like the Company, the competition includes
large store chains that have announced long-term store growth plans to aggressively expand
into additional strip shopping center locations.

Product Repositioning Plan

In the womens retail specialty
apparel industry, sales, especially in businesses that emphasize fashionable merchandise,
can vary significantly over time. Sales are volatile because of shifts in consumer
spending patterns, consumer preferences and overall economic conditions; the impact of
competition; variations in weather patterns; fluctuations in consumer acceptance of
products; changes in the ability to develop new merchandise; differences in promotional
strategies; and movements in consumer confidence levels. These variables caused the
Companys sales per average store to fluctuate in the past. Thus, recent sales
performance is not necessarily indicative of future sales performance. As a result,
management believes that long-term sales projections within a defined narrow range are not
reliable.

After fiscal 2001, when net income
declined to $0.4 million, the Company incurred net losses. Since then, the Company has
sought to absorb normal cost inflation and return to long-term profitability through a
goal of sales per average store better than in fiscal 2001 with merchandise margins at
least as high. This unrealized financial goal was translated in early fiscal 2003 into an
integrated operational plan designed to reposition the Companys product offering.
This plan has four principal components: (i) to improve the design of the Companys
merchandise and thereby differentiate it from competitors merchandise, (ii) to
market more items together as coordinated outfits rather than separately as individual
garments, (iii) to put more emphasis on fashionable merchandise and less on basic items,
and (iv) to raise the level of merchandise presentation in the store to make shopping
easier and to encourage outfit buying. This plan relies primarily on the Companys
intellectual capital. Only small amounts of financial capital are required to execute the
plan.

This section constitutes
forward-looking information under the Reform Act, which is subject to the uncertainties
and other risk factors referred to under the caption Future Results.

Liquidity and Capital
Resources

(This section provides details
about the Companys principal sources of liquidity.)

Cash Flow

Net cash provided from operating
activities was $5.1 million in the first half of fiscal 2004 and $13.7 million in the
first half of fiscal 2003. This change resulted principally from smaller decreases in
inventory ($0.5 million in the first half of fiscal 2004 versus $16.7 million in the first
half of fiscal 2003) and accounts receivable ($0.6 million in the first half of fiscal
2004 versus $1.7 million in the first half of fiscal 2003) partially offset by an increase
in accounts payable and accrued expenses of $2.0 million in the first half of fiscal 2004
versus a decrease in that item of $4.6 million in the first half of fiscal 2003 and a
smaller net loss ($4.9 million in the first half of fiscal 2004 versus $8.8 million in the
first half of fiscal 2003).

Balance Sheet Sources of
Liquidity

The Companys cash and cash
equivalents were $18.4 million at July 31, 2004 compared with $23.9 million at August 2,
2003 and $14.4 million at January 31, 2004.

Inventories were stated at $48.5
million at July 31, 2004 compared with $44.9 million at August 2, 2003, principally as a
result of more units, and compared with $49.1 million at January 31, 2004. (See,
Critical Accounting Policies  Inventory for a discussion of estimates
made by management in stating inventories in financial statements prepared in accordance
with generally accepted accounting principles.) The additional units of inventory were
primarily new Fall merchandise items.

Property and equipment decreased to
$71.4 million at July 31, 2004 from $83.0 million at August 2, 2003, principally from
depreciation, compared with $76.7 million at January 31, 2004.

Other Liquidity Sources

Import purchases by the Company are made in U.S. dollars.  Imports are generally financed by trade letters of credit.  They
constituted approximately 53% of total purchases in fiscal 2003.

The Financing Agreement was extended
and expanded during fiscal 2003. The term was extended three years to August 15, 2008. The
line of credit was increased from $40 million to $50 million for the Companies, subject to
availability of credit as described in the following paragraphs. The line of credit may be
used on a revolving basis by any of the Companies to support trade letters of credit and
standby letters of credit and to finance loans. At July 31, 2004, trade letters of credit
for the account of the Companies and supported by CIT were outstanding in the amount of
$27.0 million and standby letters of credit were outstanding in the amount of $6.1
million. Standby letters of credit were used principally in connection with insurance
policies issued to the Company. Subject to the following paragraph, the availability of
credit (within the aggregate $50 million line of credit) to any of the Companies at any
time is the excess of its borrowing base over the sum of (x) the aggregate outstanding
amount of its letters of credit and its revolving loans, if any, and (y) at CITs
option, the sum of (i) unpaid sales taxes, and (ii) up to $500,000 in total liabilities of
the Companies under permitted encumbrances (as defined in the Financing Agreement). The
borrowing base, as to any of the Companies, is the sum of (x) a percentage of the book
value of its eligible inventory (both on hand and unfilled purchase orders financed with
letters of credit), ranging from 65% to 75% depending on the time of year, (y) the balance
from time to time in an account in its name that has been pledged to the lenders (a
Pledged Account) and (z) 85% of certain receivables from credit card
companies.

The provisions of the preceding
paragraph to the contrary notwithstanding, the Companies are required to maintain unused
at all times combined asset availability of at least $5 million. Except for the maintenance of a
minimum availability of $5 million and a limit on capital expenditures, the Financing
Agreement does not contain any significant financial covenants.

The combined borrowing capacity of
the Companies is cyclical due to the seasonality of the retail industry. At July 31, 2004,
the combined borrowing capacity of the Companies, after satisfying the $5 million minimum
availability requirement, was $7.2 million; the Pledged Account had a zero balance; the
Companies cash on hand was unrestricted; and no loan was outstanding.

The line of credit is collateralized
by a security interest in (i) inventory and its proceeds, (ii) receivables from credit
card companies and (iii) the balance from time to time in the Pledged Account.

The Financing Agreement includes
certain restrictive covenants that impose limitations (subject to certain exceptions) on
the Companies with respect to making certain investments, declaring or paying dividends,
making loans, engaging in certain transactions with affiliates, or consolidating, merging
or making acquisitions outside the ordinary course of business.

The Company has drawn on the
revolving loan facility under the Financing Agreement from time to time to meet its peak
working capital requirements. Interest is payable monthly based on a 360-day year either
at the prime rate plus an incremental percentage up to 0.75% per annum or at the LIBOR
rate plus an incremental percentage ranging from 1.75% to 2.50% per annum. The borrower
can select either the prime rate or the LIBOR rate as the basis for determining the
interest rate. In either case, the incremental percentage is determined by the average
excess availability.

The Companys obligation to pay
customs duties on merchandise imports was collateralized by an unsecured surety bond for
$1.5 million during the first quarter of fiscal 2003. The surety bond is now $2.0 million.
The tightening market for surety bonds has made it necessary for the Company to support
the surety bond with a standby letter of credit under the Financing Agreement in the
amount of $0.5 million.

Short-term trade credit represents a
significant source of financing for domestic merchandise purchases. Trade credit arises
from the willingness of the Companys domestic vendors to grant extended payment
terms for inventory purchases and is generally financed either by the vendor or a
third-party factor. The availability of trade credit depends on the Companys having
other sources of liquidity, as well. In particular, credit authorizations by trade
creditors focus on the amount of the Companys cash and cash equivalents and its
borrowing capacity under the Financing Agreement.

In November 2003, the Company agreed
in principle with the IRS on the settlement of tax refund claims the Company had filed for
research credits and for deductions attributable to certain bank financing transactions
during 1989 to 1992. In April 2004, the Company received payment from the IRS in the
amount of $2.5 million (which was initially deferred on the balance sheet); the Company
recently received final clearance from the IRS regarding this amount. Consequently, the
Company recognized the benefit of these refund claims, including the related interest
thereon, during the second quarter of fiscal 2004.

(The following three sections
provide details about certain uses of cash by the Company.)

Capital Expenditures

Capital expenditures in the first
half of fiscal 2004 were $0.6 million compared with $1.8 million in the first half of
fiscal 2003.

Capital expenditures are projected to
be approximately $3.0 million for fiscal 2004, including implementation of the
Companys product repositioning plan. This paragraph constitutes forward-looking
information under the Reform Act and is subject to the uncertainties and other risk
factors referred to under the caption Future Results.

Principal Contractual
Obligations and Certain Other Commercial Commitments

The principal contractual obligations
of the Company and certain other commercial commitments at July 31, 2004 (see, also
Critical Accounting Policies  Incurred But Not Reported Claims For Personal
Injuries and Medical Benefits) are summarized in the following charts:

|                                    | Payments Due by Period (000's omitted) |        |        |       
|----------------------------------- | -------------------------------------- | ------ | ------ | ------
|
|Fixture Capital Leases*             | $4,310                                 | $1,674 | $2,636 | $0    
|Distribution Center Mortgage*       | 3,650                                  | 663    | 1,512  | 1,475 
|Call Center Systems Capital   Lease | 370                                    | 345    | 25     | 0     
|Total                               | $8,330                                 | $2,682 | $4,173 | $1,475

| |  | 
| |  | 
| |  | 

|                          | Amount of Commitment Per Period (000's omitted) |         |         |        
|------------------------- | ----------------------------------------------- | ------- | ------- | -------
|
|Operating Leases          | $259,158                                        | $43,471 | $73,762 | $56,604
|Trade Letters of Credit** | 26,986                                          | 26,986  | 0       | 0      
|Standby Letters of Credit | 6,145                                           | 6,145   | 0       | 0      
|Customs Duties Bond***    | 1,500                                           | 1,500   | 0       | 0      
|Total                     | $293,789                                        | $78,102 | $73,762 | $56,604

---

*The proceeds of the fixture capital
leases were principally used to partially finance new store construction in fiscal 2001.
The proceeds of the distribution center mortgage were principally used to partially
finance the construction cost of the Companys national distribution center, which
was completed in fiscal 1993.

**Trade letters of credit support
Company obligations under certain purchase orders for merchandise imports for which
payment is not yet due. (Other purchase orders represent material commercial obligations
but are not supported by trade letters of credit.)

***The Company maintains a surety
bond for customs duties in the amount of $2.0 million, which is supported by a standby
letter of credit in the amount of $0.5 million included on the Standby Letters of Credit
line.

Pending Litigation

The Company is involved in legal
actions and claims arising in the ordinary course of business. Management believes (based
on advice of legal counsel) that such litigation and claims, net of reserves, will not
have a material adverse effect on the Companys financial position, annual results of
operations or annual cash flows.

In addition, on May 1, 2003, a suit
in California Superior Court, Los Angeles County, styled Erik Stanford vs. United
Retail Incorporated was served on the Company by a former store manager in California.
On March 3, 2004, an amended complaint was served that added another plaintiff. The suit
is purportedly a class action on behalf of certain current and former associates in
California in the previous four years.

The plaintiffs in the Stanford
case assert state wage and hour claims.

The Company intends to oppose class
certification strongly and to defend the Stanford case vigorously on the merits at
trial, which is likely to be scheduled to take place after fiscal 2004. However, the
plaintiffs have raised the possibility of settlement (without making a specific settlement
demand) and the Company intends to participate in mediation proceedings to resolve the
matter. Mediation is scheduled for the third quarter of fiscal 2004 but might extend
beyond then.

Although counsel is unable to predict
the ultimate outcome of the Stanford case, management does not believe that the
case will have a material impact on the Companys financial position. However, given
the uncertainty at this stage, it is possible that if either an adverse judgment for
damages is rendered or a negotiated settlement is agreed upon, the amount payable could be
material to the Companys annual cash flows. Further, the amount payable, net of
reserves, could be material to the Companys results of operations for the fiscal
year in which the matter is resolved.

Meeting Cash Requirements

The Companys cash requirements
include, among other things, (i) anticipated working capital needs, including seasonal
inventory financing, (ii) financing activities, including payments due on its principal
contractual obligations, (iii) investing activities, including costs for building stores
and replacing fixtures where appropriate, and (iv) possible settlement of the
Stanford wage and hour class action lawsuit in the Fall 2004 season (see,
Pending Litigation).

During the first half of fiscal 2004,
the Company funded repayments of long term debt and payments on capital lease obligations
and net cash used in investing activities from net cash provided by operating activities.
The Companys historical sources of liquidity have been the availability of credit
under the Financing Agreement on a revolving basis and short-term trade credit, as well as
its cash on hand and net cash provided by operating activities.

Management believes the sources of
liquidity mentioned in the preceding paragraph will continue to be adequate to meet the
Companys cash requirements to conduct operations in the Fall 2004 season and the
Spring 2005 season, respectively, in a manner consistent with the seasonal operating
results in the previous year. However, in the event the Company incurs an operating loss
in Fall 2004 materially higher than in Fall 2003 or in Spring 2005 materially higher than
in Spring 2004, additional sources of liquidity might be required.

This section constitutes
forward-looking information under the Reform Act and is subject to the uncertainties and
other risk factors referred to under the caption Future Results.

Critical Accounting
Policies

Introduction

This section discusses the
Companys critical accounting policies.

Financial statements prepared by
companies in accordance with generally accepted accounting principles are affected by the
policies followed by management in preparing them. Some accounting policies require
difficult, subjective or complex judgments by corporate management, often as a result of
the need to make estimates about the effect of matters that are inherently uncertain.
Among the most important accounting policies of the Company that involve such management
judgments are (i) the use of the retail method of accounting for inventory, (ii) the use
of estimates of incurred but not reported claims for uninsured damages for personal
injuries, for self-insured workers compensation benefits and for benefits under the
Companys self-insured medical, dental and prescription plans for its associates, as
well as future development costs of reported claims (collectively, IBNR
Claims) and (iii) determining whether to continue the valuation allowance for the
Companys net deferred tax assets, including NOLs.

Inventory

In accordance with generally accepted
accounting principles, inventories are stated at the lower of cost or market. The Company
utilizes the retail method, under which a cost-to-price relationship is developed on the
basis of original cost as compared to initial retail selling price. The valuation of
inventories at cost and the resulting margins are calculated by applying this
cost-to-price relationship to the retail value of inventories. Consequently, the use of
the retail inventory method results in valuing inventories at lower of cost or market.

Inherent in the retail inventory
method are management estimates on current and future selling value of the inventory.
These estimates, which are described in the following paragraphs, can significantly impact
the ending inventory valuation at cost, as well as resulting margins. In the womens
retail specialty apparel industry, sales, especially in businesses that emphasize
fashionable merchandise, can vary significantly over time. Sales are volatile because of
shifts in consumer spending patterns, consumer preferences and overall economic
conditions; the impact of increased competition; variations in weather patterns;
fluctuations in consumer acceptance of products; changes in the ability to develop new
merchandise; differences in promotional strategies; and movements in consumer confidence
levels. The necessity for management estimates based on these variables, coupled with the
fact that the retail inventory method is an averaging process, can produce inventory
valuations at any point in time that are inexact.

Permanent markdowns, when taken,
reduce both the price and cost components of inventory on hand, which maintains the
established cost-to-price relationship. Deferred markdowns can result in an overstatement
of inventories under the lower of cost or market principle. Accordingly, at the end of
each six-month season, management conducts a thorough review of inventory on hand. Based
on managements business judgment, the Company may reduce further the carrying value
of inventories by recording a markdown reserve. Markdown reserves are established for
inventory categories with sales performance below expectations and/or unsold quantities in
excess of expectations. Also, a markdown reserve is established by management to reduce
the carrying value of obsolete categories of merchandise to their estimated net realizable
value.

The markdown reserves at the end of
the second quarter of fiscal 2004, fiscal 2003 and fiscal 2002, respectively, ranged from
a high of $1.8 million to a low of $1.5 million. Giving effect to these reserves,
inventories were stated at approximately $48.5 million at July 31, 2004, $44.9 million at
August 2, 2003 and $58.1 million at August 3, 2002.

Markdown reserves are likely to
continue to fluctuate, principally because the market environment is dynamic for the
reasons set forth above. However, a consistent methodology for markdown reserves is one of
the Companys important accounting objectives.

Recording a reserve reduces the
inventory on the Companys balance sheet and is charged to the Companys cost of
sales. If inventories, net of reserves, were overestimated at the end of a period, assets
and income for that period would be overstated and margins for the beginning of the next
period would be lower. (The opposite would be true if inventories were underestimated.)

Management believes that the
inventories shown on all the balance sheets included in the financial statements contained
in this Report were properly stated in all material respects.

Incurred But Not Reported
Claims For Personal Injuries and Medical Benefits

In accordance with generally accepted
accounting principles, the Company records a liability for IBNR Claims. This liability is
based on (i) the number and size of outstanding claims, (ii) a comparison between the
dates paid claims were incurred and the dates they were paid, (iii) an analysis of the
amounts previously paid, (iv) projections of inflation in medical costs and (v) advice
from time to time from its insurance broker. (The Company has insurance policies with
coverage for personal injury claims but it remains liable for a self-insured retention,
which is collateralized by standby letters of credit under the Financing Agreement. The
Company is self-insured for most workers compensation benefits and for its medical,
dental and prescription plans for associates but it has stop loss insurance policies to
limit its liability.) The estimates underlying the liability for IBNR Claims are matters
of judgment on which insurance experts may differ.

If the outcome of claims made with
respect to a fiscal period were to exceed the recorded IBNR liability for that period, the
liabilities on the balance sheet would have been understated and income would have been
overstated for the period in question. (The opposite would be true if the subsequent
outcome was less than the recorded IBNR liability.)

As the use of different estimates
would change the IBNR liability recorded materially, a consistent approach to estimating
liability for IBNR Claims is one of the Companys important accounting objectives.

Management believes that the
liabilities for IBNR Claims reflected in the balance sheets at July 31, 2004 and August 2,
2003 included in the financial statements contained in this Report were fairly stated in
all material respects, subject to the uncertainties of litigation and the risk of
different than anticipated inflation in medical costs.

Tax Valuation Allowance

In fiscal 2002, the Company recorded
a $7.3 million charge to establish a valuation allowance for its NOL carryforwards and
other net deferred tax assets. The tax valuation allowance was calculated in accordance
with the provisions of SFAS No. 109, Accounting for Income Taxes (SFAS
No. 109), which places significant importance on the Companys cumulative
operating results in the most recent three-year period when assessing the need for a tax
valuation allowance. The tax valuation allowance was increased by $12.6 million in fiscal
2003 and by $2.6 million in the first half of fiscal 2004.

The Company intends to maintain a
valuation allowance for its net deferred tax assets until management determines that
sufficient positive evidence regarding operating results exists to support reversal of the
allowance remaining at that time. A reversal of the tax valuation allowance would improve
the Companys net income/loss. Accordingly, whether to continue a tax valuation
allowance is one of the Companys important accounting matters.

Private Label Credit
Cards Issued By The Bank

The Company and World Financial
Network National Bank (the Bank) are parties to a Private Label Credit Card
Program Agreement, dated January 27, 1998 (as amended, the Credit Card Program
Agreement).

Under the Credit Card Program
Agreement, the Bank issues credit cards to eligible Company customers who apply to the
Bank. Net credit sales volume with the Bank increased to $58.6 million in the first half
of fiscal 2004 from $55.1 million in the first half of fiscal 2003. Customers must meet
standards for creditworthiness set by the Bank with the approval of the Company, provided,
however, that the Bank shall take any actions required to prevent unsafe and unsound
banking practices. The credit cards issued by the Bank are co-branded with both the
Companys AVENUE service mark and the Banks name. The credit cards are used
only for merchandise and services offered by the Company. Credit card holders remit
payments to the Bank, generally by mailing personal checks. The Bank also handles all
statement processing, payment processing, cardholder customer service and collections from
delinquent cardholders.

In accordance with generally accepted
accounting principles, the Company does not include the receivable asset created under the
Credit Card Program Agreement in the Companys accounts receivable on its balance
sheets because the Company has no interest in the customer accounts or receivables. In
this connection, it should be noted that the Credit Card Program Agreement states that (i)
the Bank is the sole and exclusive owner of all customer accounts, (ii) the Company has no
interest in the customer accounts and (iii) the Bank is the creditor in respect of
receivables (defined in the Credit Card Program Agreement as amounts owed with respect to
retail purchases, finance charges, deferred finance charges, other fees and charges for
sales tax). Also, depending on the circumstances, the Company might not purchase the
accounts from the Bank upon the expiration of the contractual term.

The Credit Card Program Agreement is
currently scheduled to expire on February 28, 2007. The Company shall then have the right
to purchase the customer accounts from the Bank for a price equal to the receivables.
Also, the Bank shall then have the right to sell the customer accounts to the Company at
that price if the Company commences a private label credit card program either on its own
or through another issuer of credit cards. When the Credit Card Program Agreement is about
to expire without being renewed, the Company is likely to submit requests for proposals to
other banks that issue private label credit cards to retailers customers and to use
the banks proposals to evaluate a continuation of the private label credit card
program. There is no assurance, however, that other banks would make proposals to continue
the program on terms satisfactory to the Company or that the Company could finance a
program on its own without involving a bank.

Receivables as defined in the Credit
Card Program Agreement at the close of the last billing cycle in the second quarter were
$72.9 million in fiscal 2004 and $75.0 million in fiscal 2003.

The credit card program premium (or,
potentially, discount) reflected in general, administrative and store operating expenses
is an amount equal to royalties paid to the Company by the Bank minus costs charged by the
Bank. Costs are based on the volume of credit card program processing activities performed
by the Bank.

General, administrative and store
operating expenses were offset in part by premiums received from the Bank of $2.3 million
in the first half of fiscal 2004 and $1.8 million in the first half of fiscal 2003. The
increase in premiums from the Bank was primarily due to a decrease in bad debt write-offs
by the Bank, partially offset by lower finance income.

Royalties are based on program
revenues minus receivables written off by the Bank and the cost of funds for the program.
For up to the first $85 million of receivables, cost of funds means the one-year Constant
Maturities Treasury (CMT) rate plus 25 basis points to be reset every three
months (the published CMT rate was 2.16% per annum at July 30, 2004). However, the CMT
rate shall not be more than 6.75% per annum and not be less than 5.00% per annum for the
purpose of this calculation. (The Banks receivables for the program were less than
$85 million at July 31, 2004, but, if they grew larger than that amount, the cost of funds
for the excess would be based primarily on the cost of borrowing of a trust for the
purpose of securitizing receivables.)

Stores

The Companys channel of
distribution is retail stores using its AVENUE® trade name. The Company leased 530
stores at July 31, 2004.

Store counts averaged 543, 557 and
546, respectively, for fiscal 2001, 2002 and 2003 and 532 for Spring 2004. In Spring 2003,
the Company opened two stores and closed 11 stores. In Spring 2004, the Company opened no
stores and closed five stores as part of its normal lease maintenance program. The average
number of stores is expected to decline further in Fall 2004.

The annual capital expenditure
budgets after fiscal 2004 will provide for new store construction and other infrastructure
development priorities. Prioritization will be based, among other things, on overall
profitability and the availability of suitable locations at rents and on terms that fit
the Companys financial model for new store construction. This paragraph constitutes
forward-looking information under the Reform Act, which is subject to the uncertainties
and other risk factors referred to under the caption Future Results.

Retail selling space was
approximately 2.3 million square feet at July 31, 2004 and 2.4 million square feet at
August 2, 2003.

Depreciation and amortization of
property and equipment relate principally to assets in stores and were $5.9 million in the
first half of fiscal 2004 and $6.3 million in the first half of fiscal 2003.

E-Commerce

The Company has an Internet site
(www.avenue.com) that sells a selection of the merchandise that is also for sale in the
Companys stores. The Company ships its avenue.com orders from its national
distribution center in Troy, Ohio.

Sales on the website have not been
material to the Companys operations.

Suspension of Catalog
Operations

The Company mailed catalogs until
March 2003, when the Company suspended catalog mailings indefinitely.

Stock Repurchases

The Company did not repurchase shares
of its own stock in the first half of fiscal 2004 except that the trust under the
Companys Supplemental Retirement Savings Plan (SRSP) purchased 279,870
shares using funds in the deferred compensation account of Raphael Benaroya, the
Companys Chairman, President and Chief Executive Officer. The shares held in Mr.
Benaroyas SRSP account are treasury shares. The Company has no plans to repurchase
shares of its own stock at present except with trust funds under the Companys SRSP
to satisfy obligations that may arise under that plan to invest a portion of
participants accounts in Company stock.

With respect to the deferred
compensation obligations of the SRSP, the liability is marked to market and this liability
adjustment flows through the statement of operations as either an increase or a decrease
in compensation expense. With respect to the SRSP assets, marketable securities are also
marked to market except shares of Company stock, which are recorded permanently at cost.
This asset adjustment also flows through the statement of operations. The liability
adjustment and the asset adjustment are not necessarily equal in amount because of the
disparate treatment of Company stock. In the second quarter of fiscal 2004, the market
price of Company stock declined and compensation expense was reduced $0.1 million as a
result.

Corporate Acquisition
Reviews

As a matter of routine, the Company
from time to time conducts due diligence reviews of businesses that are either
for sale as a going concern or are in liquidation. The Company would consider making a bid
on a suitable corporate acquisition at an opportune price if adequate financing at
acceptable rates were available.

Seasonality

In fiscal 2001, fiscal 2002 and
fiscal 2003, the Companys operating income (loss) was better in the Spring season
than in the Fall season.

Future Results

The Company cautions that any
forward-looking statements (as such term is defined in the Reform Act) contained in this
Report or otherwise made by management of the Company involve risks and uncertainties and
are subject to change based on various important factors, many of which may be beyond the
Companys control. Accordingly, the Companys future performance and financial
results may differ materially from those expressed or implied in any such forward-looking
statements.

The following factors, among others,
could affect the Companys actual results and could cause actual results to differ
materially from those expressed or implied in any forward-looking statements included in
this Report or otherwise made by management: threats of terrorism; war risk; shifts in
consumer spending patterns, consumer preferences and overall economic conditions; the
impact of increased competition; variations in weather patterns; fluctuations in consumer
acceptance of the Companys products; uncertainties relating to execution of the
Companys product repositioning strategy; store lease expirations; risks associated
with the financial performance of the World Financial Network National Bank private label
credit card program; increases in interest rates; the ability to retain, hire and train
key personnel; risks associated with the ability of the Companys manufacturers to
deliver products in a timely manner; and political instability and other risks associated
with foreign sources of production. Also, in the Fall season of fiscal 2004, the
transition from the international quota system for apparel may disrupt apparel imports
into the United States. As a result of these variables, risks and uncertainties,
management believes that it is not possible to make reliable projections that the
Companys operating results will fall within a defined narrow range.

---

# ITEM 3. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company does not hold or issue
financial instruments for trading purposes, provided, however, that the trust under the
Companys Supplemental Retirement Savings Plan holds mutual fund shares and other
listed securities. See, the subcaption Stock Repurchases in
Managements Discussion and Analysis of Financial Condition and Results of
Operations.

Management of the Company believes
that its exposure to interest rate risk with financial instruments is not material. See,
however, in Managements Discussion and Analysis of Financial Condition and
Results of Operations (i) the eighth paragraph under the caption Other
Liquidity Sources regarding the variable interest rate payable on revolving loans to
the Companies and (ii) the final paragraph under the caption Private Label Credit
Cards Issued By The Bank for a discussion of the cost of funds associated with the
credit cards that are co-branded with the Companys AVENUE service mark and the name
of the issuer of the cards, World Financial Network National Bank.

---

# ITEM 4. CONTROLS AND
PROCEDURES.

1. The Company performed an evaluation, in which the Company's Chief Executive Officer and Chief Financial Officer
         participated, of its disclosure controls and procedures (as defined by Exchange Act Rule 13a-14(c)) with respect to
         information required to be disclosed by the Company ("Disclosures") in filings with the Securities and Exchange Commission
         (the "Commission").  Based on their evaluation, the Company's Chief Executive Officer and Chief Financial Officer each
         concluded that, as of July 31, 2004, these controls and procedures provided reasonable assurance that Disclosures are (i)
         recorded, accumulated, processed, summarized and communicated to him on a timely basis and (ii) reported within the time
         periods specified in the Commission's rules and forms.
2. During the second quarter of fiscal 2004, there were no changes in the Company's internal control over financial reporting
         that materially affected or are reasonably likely to materially affect internal control over financial reporting.

---

# PART II  OTHER INFORMATION

# ITEM 1. LITIGATION.

The subsection in Part I, Item 2,
Managements Discussion and Analysis of Financial Condition and Results of
Operations, captioned Pending Litigation is incorporated herein by
reference.

---

# ITEM 2. CHANGES IN
SECURITIES AND USE OF PROCEEDS.

The Company did not repurchase shares
of its own stock in the first half of fiscal 2004 except that the trust under the
Companys Supplemental Retirement Savings Plan (SRSP) purchased shares in
the second quarter of fiscal 2004 using funds in the deferred compensation account of
Raphael Benaroya, the Companys Chairman of the Board, President and Chief Executive
Officer. The shares held in Mr. Benaroyas SRSP account are treasury shares.

|Issuer Purchases of Equity Securities |                                     |                             |                                                                              |                                                                            
|------------------------------------- | ----------------------------------- | --------------------------- | ---------------------------------------------------------------------------- | ---------------------------------------------------------------------------
|
|Period                                | Total Number ofShares Purchased (1) | Average PricePaid per Share | Total Number ofShares Purchased asPart of PubliclyAnnounced Plans orPrograms | Maximum Number ofShares that May YetBe Purchased Underthe Plans or Programs
|May 2 to May 31                       | 247,616                             | 2.55                        | -0-                                                                          | -0-                                                                        
|June 1 to June 30                     | 32,254                              | 2.60                        | -0-                                                                          | -0-                                                                        
|July 1 to July 31                     | -0-                                 | -0-                         | -0-                                                                          | -0-                                                                        

(1)    
          The shares were purchased in open market transactions by the trust under the
          Companys Supplemental Retirement Savings Plan with funds in the deferred
          compensation account of Raphael Benaroya, the Companys Chairman of the
          Board, President and Chief Executive Officer.

---

# ITEM 4. SUBMISSION OF
MATTERS TO A VOTE OF SECURITY HOLDERS.

|(a) | The 12th Annual Meeting of Stockholders (the Meeting) was
          held on May 28, 2004.
|--- | -------------------------------------------------------------------------------------------

|(c) | The Meeting elected all the directors of the Company to serve until the
          13th Annual Meeting of Stockholders and their successors are elected,
          by the following vote:
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Name                  | For        | Withhold Authorityto Vote
|--------------------- | ---------- | -------------------------
|Joseph A. Alutto      | 10,044,191 | 738,284                  
|Raphael Benaroya      | 10,719,007 | 63,468                   
|Joseph Ciechanover    | 10,721,744 | 60,731                   
|Michael Goldstein     | 10,691,841 | 90,634                   
|Ilan Kaufthal         | 10,750,257 | 32,218                   
|Vincent P. Langone    | 10,750,257 | 32,218                   
|George R. Remeta      | 10,719,007 | 63,468                   
|Richard W. Rubenstein | 9,947,140  | 835,335                  

---

# ITEM 5.  OTHER INFORMATION.

# (a)    Employment Agreements

General Terms

In accordance with its annual practice, on September 6, 2004 United Retail Group, Inc. extended by approximately
one additional year the term of the Employment Agreements with Raphael Benaroya, Chairman of the Board, President
and Chief Executive Officer, George R. Remeta, Vice Chairman and Chief Administrative Officer, and Kenneth P.
Carroll, Senior Vice President-General Counsel and Secretary, respectively (each, an Executive).  Certain
other contractual provisions were changed and, to make the amended contracts more easily readable, each original
contract, together with its amendments, was restated in its entirety.  On September 3, 2004, the restated
contracts had been recommended by the Compensation Committee of the Board of Directors in executive session and
then had been approved by the Board of Directors in executive session.  (The restated contracts had been
discussed at previous executive sessions of the Compensation Committee and the Board, respectively.)

All the Restated Employment Agreements are dated as of September 3, 2004 and have a term (the Contract Term)
ending on the fifth anniversary of that date.  Each contract provides for specified base pay, subject to an
automatic annual cost of living increase, and semi-annual cash incentive compensation based on targets set by the
Compensation Committee for improving the consolidated operating income (loss) for the six-month periods ending
January 31st and July 31st, respectively (each a season), each year.  Continuation of executive perquisites in
accordance with past practice is provided.

Each Restated Employment Agreement grants specified severance pay in the event either (a) that employment is
terminated without cause (as defined in the contract) by United Retail Group, Inc. or (b) that (i) United Retail
Group, Inc. otherwise breaches the contract in any material respect, (ii) the Executive tenders a letter of
resignation specifying the breach and (iii) United Retail Group, Inc. fails to cure the breach within 15 days
after the delivery of the letter of resignation (the termination described in clause (a) or the uncured breach
described in clause (b) being referred to as Termination Without Cause).  Alternatively, in the event a
corporate change of control (as defined in the contract) occurs and the Executive promptly tenders a letter of
resignation (Resignation For Change of Control), the Company is obligated to pay the Executive specified
resignation compensation.  Severance pay or resignation compensation is payable in a lump sum.

In the event of Termination Without Cause or Resignation For Change of Control, the Executive is entitled to the
following benefits and additional payments:

1. pro rata incentive compensation for the current season; if earned;
2. COBRA health insurance benefits, including supplemental executive preventive medicine and
         wellness benefits, for himself and his dependents at United Retail Group, Inc.s expense until the COBRA
         benefits expire and, thereafter, through the remainder, if any, of the Contract Term equivalent
         reimbursement of healthcare expenses directly by United Retail Group, Inc.; and
3. a gross-up to offset personal income tax with respect to the payments made pursuant to clause
         (ii) of this sentence.

The Restated Employment Agreements require United Retail Group, Inc. to use reasonable efforts to continue $20
million directors and officers liability insurance coverage during the Contract Term and for three years
afterwards.  In addition, the Executive is indemnified against any personal excise tax on golden parachute
payments made to him by United Retail Group, Inc. and the amount of the excise tax indemnity is grossed up to
offset personal income tax on the indemnity.

The Restated Employment Agreements forbid the Executive to recruit away any other person who at any time within
one year prior to the Executives termination was employed by the Company.  This anti-raid provision continues
during the Contract Term and for 18 months afterwards.  Further, the Executive is not permitted to divulge the
Companys confidential information for any unauthorized purpose at any time.

Restated Employment Agreement with Raphael Benaroya

Mr. Benaroyas Restated Employment Agreement contains the following provisions, among others, in addition to the
provisions common to all three contracts.

During the Contract Term, Mr. Benaroya shall serve as the President and Chief Executive Officer and shall report
directly to the Board of Directors.  His contractual base salary is $685,000 per annum (although at present he is
drawing or deferring base salary at the rate of only $590,000 per annum).  His semi-annual incentive
compensation, in an arrangement dating back more than 10 years, can range from zero to 120% of base salary for
the six-month period depending on the degree of success in meeting Compensation Committee goals for improving
consolidated operating income (loss).

Mr. Benaroya is covered by a $4 million term life insurance policy (and the Company has maintained a $4 million
key man life insurance policy on him with the Company as the beneficiary) and group life insurance benefits of
an additional $2,380,000, and receives reimbursement of $20,000 per annum for the premium on an individual
supplemental disability insurance policy with a gross-up to offset personal income tax on the reimbursement.

In addition to the factors mentioned in the General Terms subsection, the election of another person as
Chairman or Cochairman of the Board without Mr. Benaroyas consent constitutes Termination Without Cause of his
employment.

In the event of Termination Without Cause of Mr. Benaroyas employment, his severance pay is three times the sum
of (A) his contractual annual base salary at the time, plus, (B) 60% of annual base salary (representing mid-range
target incentive compensation), plus (C) $20,000.  In the event of Mr. Benaroyas Resignation For Change of
Control, his resignation compensation is three times the sum of (A) his contractual annual base salary at the
time, plus (B) $20,000.

In the event of either Mr. Benaroyas Termination Without Cause or his Resignation for Change of Control, he is
entitled at United Retail Group, Inc. expense through the remainder of the Contract Term to continuation of his
individual term life insurance policy and group life insurance with a gross-up to offset personal income tax on
the cost of $1,500,000 of the total insurance coverage.

Mr. Benaroya shall not compete with the Company, directly or indirectly, during the Contract Term and for 18
months afterwards.

Restated Employment Agreement with George R. Remeta

Mr. Remetas Restated Employment Agreement contains the following provisions, among others, in addition to the
provisions common to all three contracts.

During the Contract Term, Mr. Remeta shall serve as the Vice Chairman and Chief Administrative Officer and shall
report directly to the Chief Executive Officer.  His contractual base salary is $500,000 per annum.  His
semi-annual incentive compensation can range from zero to 100% of base salary for the six-month period depending
on the degree of success in meeting Compensation Committee goals for improving consolidated operating income
(loss).

Mr. Remeta is covered by a $1 million term life insurance policy payable to his family and group life insurance
benefits of an additional $1,820,000 and receives reimbursement of $4,000 per annum for the premium on an
individual supplemental disability insurance policy with an income tax gross-up on the reimbursement.

In the event of Termination Without Cause of Mr. Remetas employment, his severance pay is three times the sum of
(A) his contractual annual base salary at the time, plus, (B) 50% of annual base salary (representing mid-range
target incentive compensation), plus (C) $4,000.  In the event of Mr. Remetas Resignation For Change of Control,
his resignation compensation is three times the sum of (A) his contractual annual base salary at the time, plus
(B) $4,000.

In the event of either Mr. Remetas Termination Without Cause or his Resignation for Change of Control, he is
entitled at United Retail Group, Inc.s expense through the remainder of the Contract Term to continuation of his
individual term life insurance policy and group life insurance with a gross-up to offset personal income tax on
the cost of $1,500,000 of the total insurance coverage.

Mr. Remeta shall not compete with the Company, directly or indirectly, for 36 months after termination of
employment, provided, however, that the non-competition period shall be reduced to 24 months in the event that he
receives Severance Pay or resignation compensation and returns one-third of the amount to United Retail Group,
Inc.

Restated Employment Agreement with Kenneth P. Carroll

Mr. Carrolls Restated Employment Agreement contains the following provisions, among others, in addition to the
provisions common to all three contracts.

During the Contract Term, Mr. Carroll shall serve as the Senior Vice President-General Counsel and shall report
directly to the Chief Executive Officer.  His contractual base salary is $298,000 per annum.  His semi-annual
incentive compensation can range from zero to 80% of base salary for the six-month period depending on the degree
of success in meeting Compensation Committee goals for improving consolidated operating income (loss).

In the event of Termination Without Cause of Mr. Carrolls employment, his severance pay is three times the sum
of (A) his contractual annual base salary at the time, plus, (B) 40% of annual base salary (representing mid-range
target incentive compensation).  In the event of Mr. Carrolls Resignation For Change of Control, his resignation
compensation is three times his contractual annual base salary at the time.

In the event of either Mr. Carrolls Termination Without Cause or his Resignation For Change of Control, he is
entitled at United Retail Group, Inc.s expense through the remainder of the Contract Term to conversion of his
$894,000 group life insurance to an individual policy and to a gross-up to offset personal income tax on the
insurance cost.

Mr. Carroll shall not compete with the Company, directly or indirectly, during the Contract Term and for 18
months afterwards.

(b)    Severance Pay Agreements

In order to provide formal assurances of severance pay in the event of termination of employment without cause
and to give appropriate recognition to those with long tenure, United Retail Group, Inc. entered into Severance
Pay Agreements on September 9, 2004 with its officers other than those who are a party to a Restated Employment
Agreement, namely, Paul M. McFarren, Senior Vice President-Chief Information Officer, and Jon Grossman, Vice
President-Finance.  Also, United Retail Group Inc.s respective subsidiaries entered into Severance Pay
Agreements on the same day with the 12 officers of the subsidiaries.  The purpose of the Severance Pay Agreements
is to give officers without the protection of employment agreements an incentive to remain in the Companys
employ.

All 14 Severance Pay Agreements provide that, in the event employment is terminated without cause (as defined in
the contract), the officer will receive severance pay equivalent to 26 weeks base pay plus an additional weeks
pay for each year of service over 10 years with the Company and its predecessor.  Severance pay will be remitted
in weekly installments, provided, however, that, if new employment is obtained, the weekly payments then
remaining unpaid shall be reduced by the compensation received from new employment.  In addition, during the period for which severance pay is
remitted, the Company will reimburse the officer for the excess premiums paid for COBRA health insurance and
converted group life insurance coverage over the group rates paid while in the Companys employ.

Under their Severance Pay Agreements, the total severance pay and insurance premium reimbursements payable by
United Retail Group, Inc. at September 9, 2004 would be $155,000 to Mr. McFarren and $147,000 to Mr. Grossman.  Average total benefits
for an officer of a subsidiary of United Retail Group, Inc. would be $144,000 at September 9, 2004.

---

# ITEM 6. EXHIBITS AND
REPORTS ON FORM 8-K.

(a)    
          The following exhibits are filed herewith:

|Number | Description                                                                                                                                                                                                                                                                                      
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1*  | Employment Agreement, dated as of September 3, 2004, between the Corporation and Raphael Benaroya                                                                                                                                                                                                
|10.2*  | Employment Agreement, dated as of September 3, 2004, between the Corporation and George R. Remeta                                                                                                                                                                                                
|10.3*  | Employment Agreement, dated as of September 3, 2004, between the Corporation and Kenneth P. Carroll                                                                                                                                                                                              
|10.4*  | Form of Severance Pay Agreement, dated September 9, 2004 (entered into separately by the Corporation with Paul McFarren and Jon Grossman;
similar contracts were entered into at the same time between the Corporation's respective subsidiaries and the respective officers of the subsidiaries)
|31     | Certifications pursuant to Section 302                                                                                                                                                                                                                                                           

The following exhibit is furnished herewith:

|Number | Description                           
|------ | --------------------------------------
|32     | Certifications pursuant to Section 906

The following exhibit to the
Corporations Quarterly Report on Form 10-Q for the period ended May 1, 2004 is
incorporated herein by reference:

|Number in Filing | Description                                                                   
|---------------- | ------------------------------------------------------------------------------
|10*              | Bonus agreement, dated May 28, 2004, between the Corporation and Joann Fielder

The following exhibits to the
Corporations Annual Report on Form 10-K for the year ended January 31, 2004 are
incorporated herein by reference:

|Number in Filing | Description                                                                                          
|---------------- | -----------------------------------------------------------------------------------------------------
|3                | Restated By-Laws of the Corporation                                                                  
|10.1*            | Tandem Merit Bonus Plan                                                                              
|10.2             | Form of Indemnification Agreement between the Corporation and each of its Directors                  
|14               | Code of Business Ethics for Principal Executive and Senior Financial Officers pursuant to Section 406

The following exhibit to the
Corporations Current Report on Form 8-K, dated January 8, 2004, is incorporated
herein by reference.

|Number in Filing | Description                                                                                                                                                                                          
|---------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10               | Amendment, dated December 23, 2003, to Financing Agreement among the Corporation, United Retail Incorporated, Cloudwalkers, Inc. and The CIT Group/Business Credit, Inc., as Agent and Lender ("CIT")

The following exhibit to the
Corporations Quarterly Report on Form 10-Q for the period ended August 2, 2003 is
incorporated herein by reference:

|Number in Filing | Description                    
|---------------- | -------------------------------
|21               | Subsidiaries of the Corporation

The following exhibit to the
Corporations Quarterly Report on Form 10-Q for the period ended May 3, 2003 is
incorporated herein by reference:

|Number in Filing | Description                                               
|---------------- | ----------------------------------------------------------
|10*              | Amendment to Restated Supplemental Retirement Savings Plan

The 2003 Stock Option Plan set forth
as the appendix to the Corporations proxy statement on Schedule 14A for its 2003
annual meeting of stockholders is incorporated herein by reference.*

The following exhibits to the
Corporations Annual Report on Form 10-K, as amended, for the year ended February 1,
2003 are incorporated herein by reference:

|Number in Filing | Description                                                                                                                            
|---------------- | ---------------------------------------------------------------------------------------------------------------------------------------
|10.1             | Amendment, dated January 31, 2003, to Financing Agreement among the Corporation, United Retail Incorporated, Cloudwalkers, Inc. and CIT
|10.2             | Amendment to Restated Supplemental Retirement Savings Plan                                                                             

The following exhibits to the
Corporations Quarterly Report on Form 10-Q for the period ended August 3, 2002 are
incorporated herein by reference:

|Number in Filing | Description                                                                                                                          
|---------------- | -------------------------------------------------------------------------------------------------------------------------------------
|10.1             | Amendment, dated August 2, 2002, to Financing Agreement among the Corporation, United Retail Incorporated, Cloudwalkers, Inc. and CIT
|10.2*            | Amendment to Restated Supplemental Retirement Savings Plan                                                                           

The following exhibits to the
Corporations Annual Report on Form 10-K for the year ended February 2, 2002 are
incorporated herein by reference:

|Number in Filing | Description                                                                                                                                                                                                                                          
|---------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1             | Amendment, dated April 5, 2002, to Private Label Credit Card Program Agreement, dated January 27, 1998, between the Corporation, United Retail Incorporated and World Financial Network National Bank ("Private Label Credit Card Program Agreement")
|10.2             | Amendment, dated December 29, 1999, to Private Label Credit Card Program Agreement                                                                                                                                                                   
|10.3             | Amendment, dated August 19, 1999, to Private Label Credit Card Program Agreement                                                                                                                                                                     

The following exhibits to the
Corporations Quarterly Report on Form 10-Q for the period ended November 3, 2001 are
incorporated herein by reference:

|Number in Filing | Description                                                                                                                                                   
|---------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.4*            | Summary Plan Description for United Retail Group, Inc. Incentive Compensation Program for Executives                                                          
|10.5             | Amendment, dated October 1, 2001, to Private Label Credit Card Program Agreement (Confidential portions filed separately with the Secretary of the Commission)

The following exhibit to the
Corporations Quarterly Report on Form 10-Q for the period ended August 4, 2001 is
incorporated herein by reference:

|Number in Filing | Description                            
|---------------- | ---------------------------------------
|10.1*            | Restated Stock Appreciation Rights Plan

The 2001 Stock Option Plan set forth
as an appendix to the Corporations proxy statement on Schedule 14A for its 2001
annual meeting of stockholders is incorporated herein by reference.*

The following exhibit to the
Corporations Registration Statement on Form S-8 (Registration No. 333-44868) is
incorporated herein by reference:

|Number in Filing | Description                                                                                                                           
|---------------- | --------------------------------------------------------------------------------------------------------------------------------------
|10               | Amendment, dated August 21, 2000, to Financing Agreement among the Corporation, United Retail Incorporated, Cloudwalkers, Inc. and CIT

The following exhibits to the
Corporations Annual Report on Form 10-K for the year ended January 29, 2000 are
incorporated herein by reference:

|Number in Filing | Description                                                                                                                                 
|---------------- | --------------------------------------------------------------------------------------------------------------------------------------------
|10.1             | Amendment, dated December 28, 1999, to Financing Agreement among the Corporation, United Retail Incorporated and CIT ("Financing Agreement")
|10.2             | Amendment, dated January 31, 2000, to Financing Agreement among the Corporation, United Retail Incorporated, Cloudwalkers, Inc. and CIT     

The following exhibit to the
Corporations Quarterly Report on Form 10-Q for the period ended October 30, 1999 is
incorporated herein by reference:

|Number in Filing | Description                                             
|---------------- | --------------------------------------------------------
|10.1             | Amendment, dated October 6, 1999, to Financing Agreement

The following exhibit to the
Corporations Current Report on Form 8-K, filed September 23, 1999, is incorporated
herein by reference:

|Number in Filing | Description                                                                                        
|---------------- | ---------------------------------------------------------------------------------------------------
|3                | Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock

The stockholders rights plan
filed as the exhibit to the Corporations Registration Statement on Form 8-A, dated
September 15, 1999, is incorporated herein by reference.

The following exhibit to the
Corporations Annual Report on Form 10-K for the year ended January 30, 1999 is
incorporated herein by reference:

|Number in Filing | Description                                            
|---------------- | -------------------------------------------------------
|10.1             | Amendment, dated March 29, 1999, to Financing Agreement

The 1999 Stock Option Plan set forth
as the Appendix to the Corporations proxy statement on Schedule 14A for its 1999
annual meeting of stockholders is incorporated herein by reference.*

The following exhibits to the
Corporations Quarterly Report on Form 10-Q for the period ended May 2, 1998 are
incorporated herein by reference:

|Number in Filing | Description                                                                                  
|---------------- | ---------------------------------------------------------------------------------------------
|10.1*            | 1998 Stock Option Agreement, dated May 21, 1998, between the Corporation and Raphael Benaroya
|10.2*            | 1998 Stock Option Agreement, dated May 21, 1998, between the Corporation and George R. Remeta

The following exhibits to the
Corporations Annual Report on Form 10-K for the year ended January 31, 1998 are
incorporated herein by reference:

|Number in Filing | Description                                                                                                                                                                        
|---------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1             | Restated Stockholders' Agreement, dated December 23, 1992, between the Corporation and certain of its stockholders and Amendment No. 1, Amendment No. 2 and Amendment No. 3 thereto
|10.2             | Private Label Credit Card Program Agreement                                                                                                                                        
|10.4*            | Restated 1990 Stock Option Plan as of March 6, 1998                                                                                                                                
|10.5*            | Restated 1990 Stock Option Plan as of May 28, 1996                                                                                                                                 
|10.6*            | Restated 1996 Stock Option Plan as of March 6, 1998                                                                                                                                

The following exhibit to the
Corporations Quarterly Report on Form 10-Q for the period ended November 1, 1997 is
incorporated herein by reference:

|Number in Filing | Description                                                
|---------------- | -----------------------------------------------------------
|10.1             | Amendment, dated September 15, 1997, to Financing Agreement

The following exhibits to the
Corporations Quarterly Report on Form 10-Q for the period ended August 2, 1997 are
incorporated herein by reference:

|Number in Filing | Description                                               
|---------------- | ----------------------------------------------------------
|10.1             | Financing Agreement                                       
|10.2*            | Amendment to Restated Supplemental Retirement Savings Plan

The following exhibit to the
Corporations Quarterly Report on Form 10-Q for the period ended November 2, 1996 is
incorporated herein by reference:

|Number in Filing | Description                                  
|---------------- | ---------------------------------------------
|10.1*            | Restated Supplemental Retirement Savings Plan

The following exhibits to the Corporation's Registration Statement on Form S-1 (Registration No. 33-44499), as amended, are
incorporated herein by reference:

|Number in Filing | Description                                                                                                                                                                      
|---------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1              | Amended and Restated Certificate of Incorporation of the Corporation                                                                                                             
|4.1              | Specimen Certificate for Common Stock of the Corporation                                                                                                                         
|10.2.1           | Software License Agreement, dated as of April 30, 1989, between The Limited Stores, Inc. and Sizes Unlimited, Inc. (now known as United Retail Incorporated) ("Software License")
|10.2.2           | Amendment, dated December 10, 1991, to Software License                                                                                                                          

---

*A
compensatory plan for the benefit of the Corporations management or a management
contract.

|(b) | During the second quarter of fiscal 2004, the Company filed a Current Report on
          Form 8-K on May 18, 2004 to furnish summary financial information for the first
          quarter of fiscal 2004.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

# SIGNATURES

Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

(Registrant)    
          UNITED RETAIL GROUP, INC.

|                        |                                                                                                                        
|----------------------- | -----------------------------------------------------------------------------------------------------------------------
|Date: September 9, 2004 | By: /s/ GEORGE R. REMETAGeorge R. RemetaVice Chairman of the Boardand Chief Administrative Officer-Authorized Signatory
|                        |                                                                                                                        
|                        | By: /s/ JON GROSSMANJon GrossmanVice President-Finance andChief Accounting Officer                                     

---

# EXHIBIT INDEX

(a)    
          The following exhibits are filed herewith:

|Number | Description                                                                                                                                                                                                                                                                                      
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1*  | Employment Agreement, dated as of September 3, 2004, between the Corporation and Raphael Benaroya                                                                                                                                                                                                
|10.2*  | Employment Agreement, dated as of September 3, 2004, between the Corporation and George R. Remeta                                                                                                                                                                                                
|10.3*  | Employment Agreement, dated as of September 3, 2004, between the Corporation and Kenneth P. Carroll                                                                                                                                                                                              
|10.4*  | Form of Severance Pay Agreement, dated September 9, 2004 (entered into separately by the Corporation with Paul McFarren and Jon Grossman;
similar contracts were entered into at the same time between the Corporation's respective subsidiaries and the respective officers of the subsidiaries)
|31     | Certifications pursuant to Section 302                                                                                                                                                                                                                                                           

The following exhibit is furnished herewith:

|Number | Description                           
|------ | --------------------------------------
|32     | Certifications pursuant to Section 906

The following exhibit to the
Corporations Quarterly Report on Form 10-Q for the period ended May 1, 2004 is
incorporated herein by reference:

|Number in Filing | Description                                                                   
|---------------- | ------------------------------------------------------------------------------
|10*              | Bonus agreement, dated May 28, 2004, between the Corporation and Joann Fielder

The following exhibits to the
Corporations Annual Report on Form 10-K for the year ended January 31, 2004 are
incorporated herein by reference:

|Number in Filing | Description                                                                                          
|---------------- | -----------------------------------------------------------------------------------------------------
|3                | Restated By-Laws of the Corporation                                                                  
|10.1*            | Tandem Merit Bonus Plan                                                                              
|10.2             | Form of Indemnification Agreement between the Corporation and each of its Directors                  
|14               | Code of Business Ethics for Principal Executive and Senior Financial Officers pursuant to Section 406

The following exhibit to the
Corporations Current Report on Form 8-K, dated January 8, 2004, is incorporated
herein by reference.

|Number in Filing | Description                                                                                                                                                                                          
|---------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10               | Amendment, dated December 23, 2003, to Financing Agreement among the Corporation, United Retail Incorporated, Cloudwalkers, Inc. and The CIT Group/Business Credit, Inc., as Agent and Lender ("CIT")

The following exhibit to the
Corporations Quarterly Report on Form 10-Q for the period ended August 2, 2003 is
incorporated herein by reference:

|Number in Filing | Description                    
|---------------- | -------------------------------
|21               | Subsidiaries of the Corporation

The following exhibit to the
Corporations Quarterly Report on Form 10-Q for the period ended May 3, 2003 is
incorporated herein by reference:

|Number in Filing | Description                                               
|---------------- | ----------------------------------------------------------
|10*              | Amendment to Restated Supplemental Retirement Savings Plan

The 2003 Stock Option Plan set forth
as the appendix to the Corporations proxy statement on Schedule 14A for its 2003
annual meeting of stockholders is incorporated herein by reference.*

The following exhibits to the
Corporations Annual Report on Form 10-K, as amended, for the year ended February 1,
2003 are incorporated herein by reference:

|Number in Filing | Description                                                                                                                            
|---------------- | ---------------------------------------------------------------------------------------------------------------------------------------
|10.1             | Amendment, dated January 31, 2003, to Financing Agreement among the Corporation, United Retail Incorporated, Cloudwalkers, Inc. and CIT
|10.2             | Amendment to Restated Supplemental Retirement Savings Plan                                                                             

The following exhibits to the
Corporations Quarterly Report on Form 10-Q for the period ended August 3, 2002 are
incorporated herein by reference:

|Number in Filing | Description                                                                                                                          
|---------------- | -------------------------------------------------------------------------------------------------------------------------------------
|10.1             | Amendment, dated August 2, 2002, to Financing Agreement among the Corporation, United Retail Incorporated, Cloudwalkers, Inc. and CIT
|10.2*            | Amendment to Restated Supplemental Retirement Savings Plan                                                                           

The following exhibits to the
Corporations Annual Report on Form 10-K for the year ended February 2, 2002 are
incorporated herein by reference:

|Number in Filing | Description                                                                                                                                                                                                                                          
|---------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1             | Amendment, dated April 5, 2002, to Private Label Credit Card Program Agreement, dated January 27, 1998, between the Corporation, United Retail Incorporated and World Financial Network National Bank ("Private Label Credit Card Program Agreement")
|10.2             | Amendment, dated December 29, 1999, to Private Label Credit Card Program Agreement                                                                                                                                                                   
|10.3             | Amendment, dated August 19, 1999, to Private Label Credit Card Program Agreement                                                                                                                                                                     

The following exhibits to the
Corporations Quarterly Report on Form 10-Q for the period ended November 3, 2001 are
incorporated herein by reference:

|Number in Filing | Description                                                                                                                                                   
|---------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.4*            | Summary Plan Description for United Retail Group, Inc. Incentive Compensation Program for Executives                                                          
|10.5             | Amendment, dated October 1, 2001, to Private Label Credit Card Program Agreement (Confidential portions filed separately with the Secretary of the Commission)

The following exhibit to the
Corporations Quarterly Report on Form 10-Q for the period ended August 4, 2001 is
incorporated herein by reference:

|Number in Filing | Description                            
|---------------- | ---------------------------------------
|10.1*            | Restated Stock Appreciation Rights Plan

The 2001 Stock Option Plan set forth
as an appendix to the Corporations proxy statement on Schedule 14A for its 2001
annual meeting of stockholders is incorporated herein by reference.*

The following exhibit to the
Corporations Registration Statement on Form S-8 (Registration No. 333-44868) is
incorporated herein by reference:

|Number in Filing | Description                                                                                                                           
|---------------- | --------------------------------------------------------------------------------------------------------------------------------------
|10               | Amendment, dated August 21, 2000, to Financing Agreement among the Corporation, United Retail Incorporated, Cloudwalkers, Inc. and CIT

The following exhibits to the
Corporations Annual Report on Form 10-K for the year ended January 29, 2000 are
incorporated herein by reference:

|Number in Filing | Description                                                                                                                                 
|---------------- | --------------------------------------------------------------------------------------------------------------------------------------------
|10.1             | Amendment, dated December 28, 1999, to Financing Agreement among the Corporation, United Retail Incorporated and CIT ("Financing Agreement")
|10.2             | Amendment, dated January 31, 2000, to Financing Agreement among the Corporation, United Retail Incorporated, Cloudwalkers, Inc. and CIT     

The following exhibit to the
Corporations Quarterly Report on Form 10-Q for the period ended October 30, 1999 is
incorporated herein by reference:

|Number in Filing | Description                                             
|---------------- | --------------------------------------------------------
|10.1             | Amendment, dated October 6, 1999, to Financing Agreement

The following exhibit to the
Corporations Current Report on Form 8-K, filed September 23, 1999, is incorporated
herein by reference:

|Number in Filing | Description                                                                                        
|---------------- | ---------------------------------------------------------------------------------------------------
|3                | Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock

The stockholders rights plan
filed as the exhibit to the Corporations Registration Statement on Form 8-A, dated
September 15, 1999, is incorporated herein by reference.

The following exhibit to the
Corporations Annual Report on Form 10-K for the year ended January 30, 1999 is
incorporated herein by reference:

|Number in Filing | Description                                            
|---------------- | -------------------------------------------------------
|10.1             | Amendment, dated March 29, 1999, to Financing Agreement

The 1999 Stock Option Plan set forth
as the Appendix to the Corporations proxy statement on Schedule 14A for its 1999
annual meeting of stockholders is incorporated herein by reference.*

The following exhibits to the
Corporations Quarterly Report on Form 10-Q for the period ended May 2, 1998 are
incorporated herein by reference:

|Number in Filing | Description                                                                                  
|---------------- | ---------------------------------------------------------------------------------------------
|10.1*            | 1998 Stock Option Agreement, dated May 21, 1998, between the Corporation and Raphael Benaroya
|10.2*            | 1998 Stock Option Agreement, dated May 21, 1998, between the Corporation and George R. Remeta

The following exhibits to the
Corporations Annual Report on Form 10-K for the year ended January 31, 1998 are
incorporated herein by reference:

|Number in Filing | Description                                                                                                                                                                        
|---------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1             | Restated Stockholders' Agreement, dated December 23, 1992, between the Corporation and certain of its stockholders and Amendment No. 1, Amendment No. 2 and Amendment No. 3 thereto
|10.2             | Private Label Credit Card Program Agreement                                                                                                                                        
|10.4*            | Restated 1990 Stock Option Plan as of March 6, 1998                                                                                                                                
|10.5*            | Restated 1990 Stock Option Plan as of May 28, 1996                                                                                                                                 
|10.6*            | Restated 1996 Stock Option Plan as of March 6, 1998                                                                                                                                

The following exhibit to the
Corporations Quarterly Report on Form 10-Q for the period ended November 1, 1997 is
incorporated herein by reference:

|Number in Filing | Description                                                
|---------------- | -----------------------------------------------------------
|10.1             | Amendment, dated September 15, 1997, to Financing Agreement

The following exhibits to the
Corporations Quarterly Report on Form 10-Q for the period ended August 2, 1997 are
incorporated herein by reference:

|Number in Filing | Description                                               
|---------------- | ----------------------------------------------------------
|10.1             | Financing Agreement                                       
|10.2*            | Amendment to Restated Supplemental Retirement Savings Plan

The following exhibit to the
Corporations Quarterly Report on Form 10-Q for the period ended November 2, 1996 is
incorporated herein by reference:

|Number in Filing | Description                                  
|---------------- | ---------------------------------------------
|10.1*            | Restated Supplemental Retirement Savings Plan

The following exhibits to the Corporation's Registration Statement on Form S-1 (Registration No. 33-44499), as amended, are
incorporated herein by reference:

|Number in Filing | Description                                                                                                                                                                      
|---------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1              | Amended and Restated Certificate of Incorporation of the Corporation                                                                                                             
|4.1              | Specimen Certificate for Common Stock of the Corporation                                                                                                                         
|10.2.1           | Software License Agreement, dated as of April 30, 1989, between The Limited Stores, Inc. and Sizes Unlimited, Inc. (now known as United Retail Incorporated) ("Software License")
|10.2.2           | Amendment, dated December 10, 1991, to Software License                                                                                                                          

---

*A compensatory plan for the benefit
of the Corporations management or a management contract.