# 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 May 1,
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.

YES ___X___                NO _______

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

YES _______                NO ___X____

# 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.

YES _______                NO _______

# 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 May 1, 2004, 12,937,304 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               | May 1,2004(Unaudited) | January 31,2004 | May 3,2003(Unaudited)
|------------------------------------------------------- | -------------------- | --------------------- | --------------- | ---------------------
|Current Assets:                                         |                      |                       |                 |                      
|Cash and cash equivalents                               |                      | $14,344               | $14,421         | $12,143              
|Accounts receivable                                     |                      | 1,703                 | 1,789           | 1,626                
|Inventory                                               |                      | 60,787                | 49,054          | 67,821               
|Prepaid rents                                           |                      | 4,740                 | 4,826           | 4,932                
|Other prepaid expenses                                  |                      | 1,712                 | 2,044           | 1,711                
|Total current assets                                    |                      | 83,286                | 72,134          | 88,233               
|                                                        |                      |                       |                 |                      
|Property and equipment, net                             |                      | 73,717                | 76,710          | 84,924               
|Deferred compensation plan                              |                      | 5,114                 | 4,893           | 4,144                
|Trademarks, net of accumulated                          |                      |                       |                 |                      
|amortization of $405, $389 and $341                     |                      | 478                   | 493             | 541                  
|Other assets                                            |                      | 1,386                 | 1,465           | 1,526                
|Total Assets                                            |                      | $163,961              | $155,695        | $179,368             
|                                                        |                      |                       |                
|                                                        | LIABILITIES          |                       |                 |                      
|Current liabilities:                                    |                      |                       |                 |                      
|Short-term distribution center financing                |                      | $650                  | $635            | $998                 
|Short-term capital leases                               |                      | 2,062                 | 2,086           | 1,998                
|Accounts payable and other                              |                      | 29,902                | 19,795          | 31,152               
|Disbursement accounts                                   |                      | 9,007                 | 9,434           | 8,047                
|Accrued expenses                                        |                      | 21,538                | 21,737          | 20,869               
|Total current liabilities                               |                      | 63,159                | 53,687          | 63,064               
|                                                        |                      |                       |                 |                      
|Long-term distribution center financing                 |                      | 3,158                 | 3,326           | 3,807                
|Long-term capital leases                                |                      | 3,148                 | 3,646           | 5,241                
|Long-term deferred compensation plan                    |                      | 5,114                 | 4,893           | 4,144                
|Other long-term liabilities                             |                      | 12,725                | 10,123          | 8,584                
|Total liabilities                                       |                      | 87,304                | 75,675          | 84,840               
|                                                        | 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                              |                      | 83,696                | 83,696          | 83,679               
|Retained earnings                                       |                      | 623                   | 3,986           | 18,511               
|Treasury stock (1,310,896 shares) at cost               |                      | (7,676)               | (7,676)         | (7,676)              
|Total stockholders' equity                              |                      | 76,657                | 80,020          | 94,528               
|Total liabilities and stockholders' equity              |                      | $163,961              | $155,695        | $179,368             

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

---

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

|                              | Thirteen Weeks Ended |           
|----------------------------- | -------------------- | ----------
|
|Net Sales                     | $97,519              | $101,530  
|                              |                      |           
|Cost of goods sold, including |                      |           
|buying and occupancy costs    | 76,645               | 79,361    
|                              |                      |           
|Gross profit                  | 20,874               | 22,169    
|                              |                      |           
|General, administrative and   |                      |           
|store operating expenses      | 23,972               | 26,380    
|                              |                      |           
|Operating Loss                | (3,098)              | (4,211)   
|                              |                      |           
|Interest expense, net         | 216                  | 252       
|                              |                      |           
|Loss before income taxes      | (3,314)              | (4,463)   
|                              |                      |           
|Provision for income taxes    | 49                   | 82        
|                              |                      |           
|Net loss                      | ($3,363)             | ($4,545)  
|                              |                      |           
|Net loss per share            |                      |           
|Basic                         | ($0.26)              | ($0.35)   
|Diluted                       | ($0.26)              | ($0.35)   
|                              |                      |           
|Weighted average number of    |                      |           
|shares outstanding            |                      |           
|Basic                         | 12,937,304           | 12,937,304
|Common stock equivalents      |                      |           
|(stock options)               | -                    | -         
|Diluted                       | 12,937,304           | 12,937,304

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

---

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

|                                                        | Thirteen Weeks Ended |         
|------------------------------------------------------- | -------------------- | --------
|
|Cash Flows From Operating Activities:                   |                      |         
|Net loss                                                | ($3,363)             | ($4,545)
|Adjustments to reconcile net loss to net cash           |                      |         
|provided by (used in) operating activities:             |                      |         
|Depreciation and amortization of property and equipment | 3,007                | 3,139   
|Amortization of deferred charges and other              |                      |         
|intangible assets                                       | 117                  | 128     
|Loss on disposal of assets                              | 26                   | 251     
|Deferred compensation                                   | 1                    | 78      
|Deferred lease assumption revenue amortization          | (2)                  | (16)    
|Changes in operating assets and liabilities:            |                      |         
|Accounts receivable                                     | 86                   | 1,368   
|Income taxes                                            | 34                   | 43      
|Inventory                                               | (11,733)             | (6,252) 
|Accounts payable and accrued expenses                   | 9,886                | 4,898   
|Prepaid expenses                                        | 418                  | 619     
|Other assets and liabilities                            | 2,599                | 221     
|Net Cash Provided by (used in) Operating Activities     | 1,075                | (68)    
|                                                        |                      |         
|Investing Activities:                                   |                      |         
|Capital expenditures                                    | (40)                 | (594)   
|Deferred payment for property and equipment             | (10)                 | 4       
|                                                        |                      |         
|Net Cash Used in Investing Activities                   | (50)                 | (590)   
|                                                        |                      |         
|Financing Activities                                    |                      |         
|Repayments of long-term debt                            | (153)                | (376)   
|Payments on capital lease obligations                   | (522)                | (488)   
|Increase (decrease) in disbursement accounts            | (427)                | (3,875) 
|Issuance of short-term debt                             | -                    | 290     
|Repayments of short-term debt                           | -                    | (290)   
|                                                        |                      |         
|Net Cash Used in Financing Activities                   | (1,102)              | (4,739) 
|                                                        |                      |         
|Net decrease in cash and cash equivalents               | (77)                 | (5,397) 
|Cash and cash equivalents, beginning of period          | 14,421               | 17,540  
|Cash and cash equivalents, end of period                | $14,344              | $12,143 

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

---

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 weeks ended May 1, 2004 and
May 3, 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 weeks ended May 1, 2004 and May 3, 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 |                
|                                 | May 1,2004           | May 3,2003     
|                                 |                      |                
|Options                          | 1,931,812            | 1,841,572      
|Range of option prices per share | $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 (SFAS No.
123). 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 under SFAS No. 123, Accounting For Stock-Based
Compensation to stock-based employee compensation:

|                                                                                                                                         |                      |           
|---------------------------------------------------------------------------------------------------------------------------------------- | -------------------- | ----------
|                                                                                                                                         | Thirteen Weeks Ended |           
|(dollars in thousands except forper share amounts)                                                                                       | May 1,2004           | May 3,2003
|                                                                                                                                         |                      |           
|Reported net loss                                                                                                                        | ($3,363)             | ($4,545)  
|Add back: Compensation expense                                                                                                           | -                    | 78        
|Deduct: Total stock-based employeecompensation expense determined underfair value based method for all awards,net of related tax effects | (75)                 | (69)      
|                                                                                                                                         |                      |           
|Pro forma net loss                                                                                                                       | ($3,438)             | ($4,536)  
|                                                                                                                                         |                      |           
|Loss per share:                                                                                                                          |                      |           
|Basic - as reported                                                                                                                      | ($0.26)              | ($0.35)   
|Basic - pro forma                                                                                                                        | ($0.27)              | ($0.35)   
|                                                                                                                                         |                      |           
|Diluted - as reported                                                                                                                    | ($0.26)              | ($0.35)   
|Diluted - pro forma                                                                                                                      | ($0.27)              | ($0.35)   

# 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
May 1, 2004, the borrowing capacity of the Companies under the Financing Agreement with
CIT, after satisfying the $5 million minimum availability requirement, was $22.4 million,
trade letters of credit for the account of the Companies were outstanding in the amount of
$22.1 million, standby letters of credit were outstanding in the amount of $5.5 million
and no loan from CIT was outstanding. The Companys cash and cash equivalents of
$14.3 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.

In
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% and 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

Reconciliation
of the provision for income taxes from the U.S. Federal statutory rate to the
Companys effective rate is as follows (dollars in thousands):

|                           | Thirteen Weeks Ended |         |          |        
|-------------------------- | -------------------- | ------- | -------- | -------
|
|                           |                      |         |          |        
|Tax at Federal rate        | ($1,160)             | (35.0%) | ($1,562) | (35.0%)
|State income taxes, net of |                      |         |          |        
|Federal benefit            | (56)                 | (1.7%)  | (13)     | (0.3%) 
|Change in State NOL        | (68)                 | (2.0%)  | (451)    | (10.1%)
|Other                      | 7                    | 0.2%    | 7        | 0.2%   
|Sub-total                  | (1,277)              | (38.5%) | (2,019)  | (45.2%)
|                           |                      |         |          |        
|Change in deferred tax     |                      |         |          |        
|valuation allowance        | 1,326                | 40.0%   | 2,101    | 47.0%  
|                           |                      |         |          |        
|                           | $49                  | 1.5%    | $82      | 1.8%   

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.
Although only a preliminary settlement has been reached with the IRS, in April 2004, the
Company received payment from the IRS in the amount of $2.5 million (which includes $1.2
million representing interest). The Company has not received final clearance from the IRS.
Upon receipt of final clearance, the Company will recognize the benefit of the refund
claims, including the related interest thereon. It is anticipated that the $1.3 million
refund will be recorded as an increase to stockholders equity as it relates to stock
warrant deductions and the $1.2 million interest amount will be recorded in the
Companys results of operations. An additional payment estimated to be approximately
$0.7 million is also expected in connection with the claim related to research credits and
when received, this item would be recorded in the Companys operating results.

Significant
components of the Companys deferred tax assets and liabilities as of May 1, 2004 are
summarized below (dollars in thousands):

|                       |         
|---------------------- | --------
|Gross asset:           |         
|Federal NOL and other  |         
|tax attributes         | $13,130 
|State NOL's            | 5,911   
|Accruals and reserves  | 4,098   
|Inventory              | 659     
|Compensation           | 602     
|                       | 24,400  
|                       |         
|Gross liability:       |         
|Depreciation           | (3,209) 
|                       |         
|Valuation allowance    | (21,191)
|                       |         
|Net deferred tax asset | $   -   

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 $1.3 million in the fiscal
year ended January 31, 2004 and quarter ended May 1, 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 |            
|                          | May 1, 2004          | May 3, 2003
|                          |                      |            
|Net cash interest expense |                      |            
|paid, including interest  |                      |            
|income of $14 and $10     | $193                 | $256       
|                          |                      |            
|Income taxes paid         | $15                  | $39        

There
were no non-cash investing activities for the thirteen weeks ended May 1, 2004 and May 3,
2003.

# 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 will not have a material adverse effect on the Companys financial position,
annual results of operations or 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.

Although
counsel is unable at this early stage 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 results of operations or cash flows.

---

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

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 products. 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.

Channel of Distribution

The Companys channel of
distribution is retail stores using its AVENUE® trade name. It leases 533 stores in 37
states. 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 year to year. 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 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 a management
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   |        |        |       
|-------------------------------- | ------ | ------ | ------ | ------ | ------ | ------
|
|Total store sales ($ millions)*  | $208.8 | $206.7 | $225.1 | $198.7 | $203.5 | $187.7
|Sales per average store ($000's) | $393   | $373   | $406   | $356   | $371   | $344  
|Average number of stores         | 532    | 554    | 555    | 558    | 548    | 545   
|Comparable store sales           | -3.4%  | -2.1%  | +3.2%  | -5.3%  | -9.3%  | -4.2% 
|Six-month CPI**                  | -3.4%  | -1.6%  | -1.9%  | 0.0%   | -1.4%  | -0.4% 

___________* Excluding shop@home
sales**U.S. Dept. of Labor, U.S. City Average, Womens and Girls Apparel

Operating Results

The declines in sales per average
store from fiscal 2001 to fiscal 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. 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. (Excluding a one-time goodwill write-off, the operating loss in fiscal 2002 was
$17.2 million.)

In order to return to long-term
profitability, it will be necessary for the Company to increase sales per average store
with merchandise margins at levels equal to, or better than, fiscal 2001.

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 and pricing; variations in weather patterns; fluctuations in consumer
acceptance of the Companys 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. The Company has sought to
return to long-term profitability through higher sales per average store with merchandise
margins at levels equal to, or better than, fiscal 2001. These financial goals were
translated into an integrated operational plan early in fiscal 2003. 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. In 2003, the Company opened five stores
and closed 24 stores. In 2004, the Company is planning to open two stores and close
approximately 15-25 stores as part of its normal lease maintenance program. Thus, the
average number of stores is expected to decline further in fiscal 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.

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 these sources of liquidity will
continue to be adequate to meet the Companys cash requirements for 12 months after
the date of this Report. The preceding sentence 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. In the event the Company incurs an
operating loss in fiscal 2004 materially higher than in fiscal 2003, additional sources of
liquidity might be required.

The Companys cash requirements
include (i) anticipated working capital needs, including seasonal inventory financing,
(ii) financing activities, including payments due on its principal contractual obligations
and (iii) investing activities, including costs for building the stores that it plans to
open, renovating certain other stores and replacing fixtures where appropriate.

DISCUSSION AND ANALYSIS

First Quarter of Fiscal
2004 Versus First Quarter of Fiscal 2003

This section provides details about
the material line items in the Companys statement of operations.

Net sales for the first quarter of
fiscal 2004 decreased 4.0% from the first quarter of fiscal 2003, to $97.5 million from
$101.5 million. The decrease was principally from fewer units sold per store. Comparable
store sales for the first 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
commonly used by specialty retail industry analysts.) Average number of stores decreased
from 550 to 534. See, Stores.

Gross profit decreased to $20.9
million in the first quarter of fiscal 2004 from $22.2 million in the first quarter of
fiscal 2003 decreasing as a percentage of net sales to 21.4% from 21.8%. Gross profit as a
percentage of net sales decreased principally because of lower merchandise margins,
partially offset by lower 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 $24.0 million in the first quarter of fiscal 2004 from
$26.4 million in the first quarter of fiscal 2003, decreasing as a percentage of net sales
to 24.6% from 26.0%. The percentage decrease was principally because of lower insurance
expense in the current quarter.

The Company incurred operating losses
of $3.1 million in the first quarter of fiscal 2004 and $4.2 million in the first quarter
of the previous year.

The Companys effective tax rate
was 1.5% for the first quarter of fiscal 2004 and 1.8% for the first quarter of fiscal
2003. The primary factor contributing to this rate in each period was that the Company
provides a valuation allowance for its net deferred tax assets. The tax valuation
allowance was increased by $1.3 million in the first quarter of fiscal 2004 and by $2.1
million in the first quarter of fiscal 2003.

The provision for income taxes was
$49,000 for the first quarter of fiscal 2004 and $82,000 for the first quarter of fiscal
2003.

The Company incurred net losses of
$3.4 million in the first quarter of fiscal 2004 and $4.5 million in 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.

May Sales Results

Net sales for May 2004 decreased 2.5%
from May 2003, to $36.0 million from $36.9 million. Comparable store sales for the month
declined 1.2%.

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 year to year. 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 and pricing; variations in weather patterns; fluctuations in consumer
acceptance of the Companys 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 that fall
within a defined narrow range are not reliable.

After fiscal 2001, when net income
declined to $0.4 million, the Company incurred net losses. The Company has sought to
return to long-term profitability through higher sales per average store with merchandise
margins at levels equal to, or better than, fiscal 2001. These financial goals were
translated into an integrated operational plan early in fiscal 2003. 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 more
enjoyable. 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 sources of liquidity.

Cash Flow

Net cash provided from operating
activities was $1.1 million in the first quarter of fiscal 2004 compared with net cash
used in operating activities of $0.1 million in the first quarter of fiscal 2003. This
improvement resulted principally from (i) a larger increase in accounts payable and
accrued expenses ($9.9 million in the first quarter of fiscal 2004 versus $4.9 million in
the first quarter of fiscal 2003) and (ii) a larger improvement in the balance of other
assets and liabilities ($2.6 million versus $0.2 million), primarily from receipt in the
first quarter of fiscal 2004 of a federal income tax refund and related interest,
partially offset by a larger increase in inventory from year end to quarter end ($11.7
million in the first quarter of fiscal 2004 versus $6.3 million in the first quarter of
fiscal 2003).

Balance Sheet Sources of
Liquidity

The Companys cash and cash
equivalents were $14.3 million at May 1, 2004 compared with $12.1 million at May 3, 2003
and $14.4 million at January 31, 2004.

During the first quarter of fiscal
2004, a planned decrease in inventories was implemented. Inventories were stated at $60.8
million at May 1, 2004 compared with $67.8 million at May 3, 2003, principally as a result
of fewer 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.)

Property and equipment decreased to
$73.7 million at May 1, 2004 from $84.9 million at May 3, 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 May 1, 2004, trade letters of credit
for the account of the Companies and supported by CIT were outstanding in the amount of
$22.1 million and standby letters of credit were outstanding in the amount of $5.5
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 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 financial covenants.

The combined borrowing capacity of
the Companies is cyclical due to the seasonality of the retail industry. At May 1, 2004,
the combined borrowing capacity of the Companies, after satisfying the $5 million minimum
availability requirement, was $22.4 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 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. Although only a preliminary
settlement has been reached with the IRS, in April 2004, the Company received payment from
the IRS in the amount of $2.5 million (which includes $1.2 million representing interest.)
The Company has not received final clearance from the IRS. Upon receipt of final
clearance, the Company will recognize the benefit of the refund claims, including the
related interest thereon. It is anticipated that the $1.3 million refund will be recorded
as an increase to stockholders equity as it relates to stock warrant deductions and
the $1.2 million interest amount will be recorded in the Companys results of
operations. An additional payment estimated to be approximately $0.7 million is also
expected in connection with the claim related to research credits and, when received, this
item would be recorded in the Companys operating results.

Capital Expenditures

This section and the one that follows
provide details about certain uses of cash by the Company.

Capital expenditures in the first
quarter of fiscal 2004 were less than $0.1 million compared with $0.6 million in the first
quarter 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 May 1, 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*             | $4,720                                 | $1,645 | $3,075 | $0    
|Distribution Center Mortgage*       | 3,808                                  | 650    | 1,480  | 1,678 
|Call Center Systems Capital   Lease | 490                                    | 417    | 73     | 0     
|Total                               | $9,018                                 | $2,712 | $4,628 | $1,678

| |  | 
| |  | 
| |  | 

|                          | Amount of Commitment Per Period (000's omitted) |         |         |        
|------------------------- | ----------------------------------------------- | ------- | ------- | -------
|
|Trade Letters of Credit** | $22,051                                         | $22,051 | $0      | $0     
|Standby Letters of Credit | 5,545                                           | 5,545   | 0       | 0      
|Customs Duties Bond***    | 1,000                                           | 1,000   | 0       | 0      
|Operating Leases          | 261,083                                         | 42,728  | 72,803  | 55,715 
|Total                     | $289,679                                        | $71,324 | $72,803 | $55,715

---

*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 $1.5 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 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.

Although counsel is unable at this
early stage 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 results of operations or
cash flows.

Meeting Cash Requirements

The Companys cash requirements
include (i) anticipated working capital needs, including seasonal inventory financing,
(ii) financing activities, including payments due on its principal contractual obligations
and (iii) investing activities, including costs for building the stores that it plans to
open, renovating certain other stores and replacing fixtures where appropriate.

During the first quarter 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 from
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 that these
sources of liquidity will continue to be adequate for 12 months after the date of this
Report to meet the Companys cash requirements.

In the womens retail specialty
apparel industry, operating results of businesses, especially businesses that emphasize
fashionable merchandise, can vary significantly over time because of shifts in consumer
spending patterns, consumer preferences and overall economic conditions; the impact of
competition and pricing; variations in weather patterns; fluctuations in consumer
acceptance of the Companys products; and changes in the ability to develop new
merchandise. In the event the Company incurs an operating loss in fiscal 2004 materially
higher than in fiscal 2003, 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 competition and pricing; variations in weather patterns;
fluctuations in consumer acceptance of the Companys 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 fiscal year, 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.

At the end of the first fiscal
quarter of each year, management values prior season merchandise to achieve historical
margin rates. A markdown reserve is established to reduce the carrying value of the prior
season merchandise. 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 first quarter of fiscal 2004, fiscal 2003 and fiscal 2002, respectively, ranged from a
high of $1.0 million to a low of $0.2 million. Giving effect to these reserves,
inventories were stated at approximately $60.8 million at May 1, 2004, $67.8 million at
May 3, 2003 and $72.3 million at May 4, 2002.

Markdown reserves are likely to
continue to fluctuate, principally because the market environment is dynamic for the
reasons set forth above.

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 the balance sheets at May 1, 2004 and May 3, 2003 included in the
financial statements contained in this Report were properly stated in all material
respects. Further, margins in the quarter that followed May 3, 2003 were within the
historical range of margins for the second fiscal quarter, indicating that the inventory
valuation at May 3, 2003 was estimated properly.

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 May 1, 2004 and May 3, 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 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 $1.3 million in
the first quarter 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 $27.5 million in the first
quarter of fiscal 2004 from $25.2 million in the first quarter 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 quarter were $70.7
million at May 1, 2004 and $71.5 million at May 3, 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 $1.0 million
in the first quarter of fiscal 2004 and $0.7 million in the first quarter of fiscal 2003.
The increase in premiums from the Bank was primarily due to a decrease in bad debt
write-offs by the Bank.

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 1.55% per annum at May 1, 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 May 1, 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 533
stores at May 1, 2004.

Store counts averaged 543, 557 and
546, respectively, for fiscal 2001, 2002 and 2003. In 2003, the Company opened five stores
and closed 24 stores. In 2004, the Company is planning to open two stores and close
approximately 15-25 stores as part of its normal lease maintenance program. Thus, the
average number of stores is expected to decline further in fiscal 2004. This paragraph
includes forward-looking information under the Reform Act, which is subject to the
uncertainties and other risk factors referred to under the caption Future
Results.

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.

Retail selling space was
approximately 2.3 million square feet at May 1, 2004 and 2.4 million square feet at May 3,
2003.

Depreciation and amortization of
property and equipment relate principally to assets in stores and were $3.0 million in the
first quarter of fiscal 2004 and $3.1 million in the first quarter 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 quarter of fiscal 2004. The Company has no plans to
repurchase shares of its own stock at present except with trust funds under the
Companys Supplemental Retirement Savings Plan to satisfy obligations that are
expected to arise under that plan to invest a portion of participants accounts in
Company stock.

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.

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: war risk; shifts in consumer spending
patterns, consumer preferences and overall economic conditions; the impact of competition
and pricing; variations in weather patterns; fluctuations in consumer acceptance of the
Companys products; changes in the ability to develop new merchandise; 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 imports into the United States. As a result of these variables, 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. Management of the Company believes that its
exposure to interest rate and market risk associated 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 May 1, 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 first 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 6. EXHIBITS AND REPORTS
ON FORM 8-K

(a)    
          The following exhibits are filed herewith:

|Number | Description                                                                   
|------ | ------------------------------------------------------------------------------
|10*    | Bonus agreement, dated May 28, 2004, between the Corporation and Joann Fielder
|31     | Certifications pursuant to Section 302                                        

The following exhibit is furnished herewith:

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

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

|Number in Filing | Description                                                                                                                                                          
|---------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1*            | Amendment, dated September 2, 2003, to Employment Agreement, dated November 20, 1998, between the Corporation and Raphael Benaroya ("Benaroya Employment Agreement") 
|10.2*            | Amendment, dated September 2, 2003, to Employment Agreement, dated November 20, 1998, between the Corporation and George R. Remeta ("Remeta Employment Agreement")   
|10.3*            | Amendment, dated September 2, 2003, to Employment Agreement, dated November 20, 1998, between the Corporation and Kenneth P. Carroll ("Carroll Employment Agreement")
|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 November 2, 2002 are incorporated herein by reference:

|Number in Filing | Description                                                        
|---------------- | -------------------------------------------------------------------
|10.1*            | Amendment, dated December 6, 2002, to Benaroya Employment Agreement
|10.2*            | Amendment, dated December 6, 2002, to Remeta Employment Agreement  
|10.3*            | Amendment, dated December 6, 2002, to Carroll Employment Agreement 

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 exhibit to the Corporations Quarterly Report on Form 10-Q for the period
ended May 4, 2002 is incorporated herein by reference:

|Number in Filing | Description                                                    
|---------------- | ---------------------------------------------------------------
|10.1*            | Amendment, dated May 30, 2002, to Benaroya Employment Agreement

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                                                                                                                                                                     
|10.4*            | Letter, dated March 1, 2002, from the Corporation to Raphael Benaroya with respect to the cost of living adjustment under the Benaroya Employment 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                                                                                                                                                   
|---------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1*            | Amendment, dated November 29, 2001, to Benaroya Employment Agreement                                                                                          
|10.2*            | Amendment, dated November 29, 2001, to Remeta Employment Agreement                                                                                            
|10.3*            | Amendment, dated November 29, 2001, to Carroll Employment Agreement                                                                                           
|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 Quarterly Report on Form 10-Q for the period
ended October 28, 2000 are incorporated herein by reference:

|Number in Filing | Description                                                       
|---------------- | ------------------------------------------------------------------
|10.1*            | Amendment, dated August 18, 2000, to Benaroya Employment Agreement
|10.2*            | Amendment, dated August 18, 2000, to Carroll Employment Agreement 

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                                                                                                                                 
|---------------- | --------------------------------------------------------------------------------------------------------------------------------------------
|10.2             | Amendment, dated December 28, 1999, to Financing Agreement among the Corporation, United Retail Incorporated and CIT ("Financing Agreement")
|10.3             | 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 October 31, 1998 are incorporated herein by reference:

|Number in Filing | Description                  
|---------------- | -----------------------------
|10.1*            | Benaroya Employment Agreement
|10.2*            | Remeta Employment Agreement  
|10.3*            | Carroll Employment Agreement 

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 first quarter of fiscal 2004, the Company filed a Current Report on
                    Form 8-K, dated February 17, 2004, to furnish summary financial information for
                    the fourth quarter of fiscal 2003.

---

# 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: June 14, 2004 | By:/s/ GEORGE R. REMETAGeorge R. RemetaVice Chairman of the Board and ChiefAdministrative Officer-Authorized SignatoryBy:/s/ JON GROSSMANJon GrossmanVice President-Finance and Chief Accounting Officer

---

# EXHIBIT INDEX

(a)    
          The following exhibits are filed herewith:

|Number | Description                                                                   
|------ | ------------------------------------------------------------------------------
|10*    | Bonus agreement, dated May 28, 2004, between the Corporation and Joann Fielder
|31     | Certifications pursuant to Section 302                                        

The following exhibit is furnished herewith:

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

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

|Number in Filing | Description                                                                                                                                                          
|---------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1*            | Amendment, dated September 2, 2003, to Employment Agreement, dated November 20, 1998, between the Corporation and Raphael Benaroya ("Benaroya Employment Agreement") 
|10.2*            | Amendment, dated September 2, 2003, to Employment Agreement, dated November 20, 1998, between the Corporation and George R. Remeta ("Remeta Employment Agreement")   
|10.3*            | Amendment, dated September 2, 2003, to Employment Agreement, dated November 20, 1998, between the Corporation and Kenneth P. Carroll ("Carroll Employment Agreement")
|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 November 2, 2002 are incorporated herein by reference:

|Number in Filing | Description                                                        
|---------------- | -------------------------------------------------------------------
|10.1*            | Amendment, dated December 6, 2002, to Benaroya Employment Agreement
|10.2*            | Amendment, dated December 6, 2002, to Remeta Employment Agreement  
|10.3*            | Amendment, dated December 6, 2002, to Carroll Employment Agreement 

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 exhibit to the Corporations Quarterly Report on Form 10-Q for the period
ended May 4, 2002 is incorporated herein by reference:

|Number in Filing | Description                                                    
|---------------- | ---------------------------------------------------------------
|10.1*            | Amendment, dated May 30, 2002, to Benaroya Employment Agreement

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                                                                                                                                                                     
|10.4*            | Letter, dated March 1, 2002, from the Corporation to Raphael Benaroya with respect to the cost of living adjustment under the Benaroya Employment 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                                                                                                                                                   
|---------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1*            | Amendment, dated November 29, 2001, to Benaroya Employment Agreement                                                                                          
|10.2*            | Amendment, dated November 29, 2001, to Remeta Employment Agreement                                                                                            
|10.3*            | Amendment, dated November 29, 2001, to Carroll Employment Agreement                                                                                           
|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 Quarterly Report on Form 10-Q for the period
ended October 28, 2000 are incorporated herein by reference:

|Number in Filing | Description                                                       
|---------------- | ------------------------------------------------------------------
|10.1*            | Amendment, dated August 18, 2000, to Benaroya Employment Agreement
|10.2*            | Amendment, dated August 18, 2000, to Carroll Employment Agreement 

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                                                                                                                                 
|---------------- | --------------------------------------------------------------------------------------------------------------------------------------------
|10.2             | Amendment, dated December 28, 1999, to Financing Agreement among the Corporation, United Retail Incorporated and CIT ("Financing Agreement")
|10.3             | 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 October 31, 1998 are incorporated herein by reference:

|Number in Filing | Description                  
|---------------- | -----------------------------
|10.1*            | Benaroya Employment Agreement
|10.2*            | Remeta Employment Agreement  
|10.3*            | Carroll Employment Agreement 

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.

---