<PAGE>

                                    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, 1999

                                       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 jurisdiction of                              (I.R.S. Employer
incorporation or organization                               Identification No.)

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

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

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


<PAGE>



         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 "1934 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
   ------         ------


                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 1934 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, 1999, 13,100,588 shares of the registrant's common stock,
$.001 par value per share, were outstanding.

<PAGE>


Item 1. FINANCIAL STATEMENTS

                   UNITED RETAIL GROUP, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             (dollars in thousands)
<TABLE>
<CAPTION>


                                                                       May 1,          January 30,              May 2,
                                                                       1999               1999                  1998
                                                                   -----------         ----------            ----------
                                                        ASSETS     (Unaudited)                               (Unaudited)
<S>                                                                <C>                 <C>                   <C>
Current assets:
  Cash and cash equivalents                                        $ 46,818            $ 45,894              $ 31,221
  Accounts receivable                                                 2,870                 513                 1,625
  Inventory                                                          50,824              45,564                48,326
  Prepaid rents                                                       3,971               3,946                 4,007
  Other prepaid expenses                                              2,950               2,429                 2,757
                                                                   --------            --------              --------
    Total current assets                                            107,433              98,346                87,936

Property and equipment, net                                          52,234              48,017                47,221
Deferred charges and other intangible assets,
  net of accumulated amortization of $2,218, $2,130
  and $1,878                                                          6,925               6,746                 6,964
Deferred income taxes                                                   736               1,120                   971
Other assets                                                            483                 363                   375
                                                                   --------            --------              --------
    Total assets                                                   $167,811            $154,592              $143,467
                                                                   ========            ========              ========

                                                   LIABILITIES
Current liabilities:
  Current portion of distribution center financing                 $  1,159            $  1,136              $  1,072
  Accounts payable, trade                                            17,537              14,208                17,182
  Accrued expenses                                                   27,598              22,659                20,808
                                                                   --------            --------              --------
    Total current liabilities                                        46,294              38,003                39,062


Distribution center financing                                         8,874               9,172                10,033
Other long-term liabilities                                           6,161               6,270                 6,749
                                                                   --------            --------              --------
    Total liabilities                                                61,329              53,445                55,844
                                                                   --------            --------              --------

                                         STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value; authorized
  1,000,000; none issued
Common stock, $.001 par value; authorized
  30,000,000; issued 13,773,900, 13,762,900,
  13,759,100; outstanding 13,100,588,
  13,089,588, 13,085,388                                                 14                  14                    14
Additional paid-in capital                                           77,534              77,458                77,345
Retained earnings                                                    30,593              25,334                11,924
Treasury stock (673,312, 673,312, 673,712
  shares) at cost                                                    (1,659)             (1,659)               (1,660)
                                                                   --------            --------              --------
    Total stockholders' equity                                      106,482             101,147                87,623
                                                                   --------            --------              --------
    Total liabilities and stockholders' equity                     $167,811            $154,592              $143,467
                                                                   ========            ========              ========
</TABLE>

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

<PAGE>

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


                                                Thirteen Weeks Ended
                                            ---------------------------
                                                May 1,         May 2,
                                                1999            1998
                                            -----------     -----------
Net sales                                       $96,693         $94,943

Cost of goods sold, including
  buying and occupancy costs                     69,719          67,823
                                            -----------     -----------

  Gross profit                                   26,974          27,120

General, administrative and
  store operating expenses                       19,007          19,907
                                            -----------     -----------

  Operating income                                7,967           7,213

Interest income, net                               (347)           (140)
                                            -----------     -----------

Income before income taxes                        8,314           7,353

Provision for income taxes                        3,055           2,783
                                            -----------     -----------

  Net income                                     $5,259          $4,570
                                            ===========     ===========

Net income per share
  Basic                                           $0.40           $0.35
                                            ===========     ===========
  Diluted                                         $0.38           $0.34
                                            ===========     ===========

Weighted average number of
  shares outstanding
    Basic                                    13,093,291      12,957,041
    Common stock equivalents
      (stock options)                           690,077         537,045
                                            -----------     -----------
    Diluted                                  13,783,368      13,494,086
                                            ===========     ===========


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

<PAGE>

                   UNITED RETAIL GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (dollars in thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                   Thirteen Weeks Ended
                                                                                 --------------------------
                                                                                   May 1,            May 2,
                                                                                   1999              1998
                                                                                 --------         ---------
<S>                                                                               <C>              <C>
Cash Flows From Operating Activities:
    Net income                                                                    $5,259            $4,570
Adjustments to reconcile net income to net cash
  provided from operating activities:
    Depreciation and amortization of property and equipment                        1,591             1,907
    Amortization of deferred charges and other
      intangible assets                                                               88                88
    Loss on disposal of assets                                                       171                17
    Deferred compensation                                                             78                 -
    Benefit from deferred income taxes                                               384             1,714
    Deferred lease assumption revenue amortization                                  (106)             (126)
Changes in operating assets and liabilities:
    Accounts receivable                                                           (2,357)           (1,054)
    Income taxes                                                                   2,617               619
    Inventory                                                                     (5,260)          (10,323)
    Accounts payable and accrued expenses                                          4,619             5,972
    Prepaid expenses                                                                (546)             (158)
    Other assets and liabilities                                                    (496)                3
                                                                                 -------           -------
Net Cash Provided from Operating Activities                                        6,042             3,229
                                                                                 -------           -------

Investing Activities:
    Capital expenditures                                                          (5,979)             (914)
    Deferred payment for property and equipment                                    1,138                30
                                                                                 -------           -------

Net Cash Used for Investing Activities                                            (4,841)             (884)
                                                                                 -------           -------

Financing Activities:
    Repayments of long-term debt                                                    (275)             (255)
    Issuance of loans to officers                                                    (41)           (1,993)
    Exercise of stock options                                                         39                 2
                                                                                 -------           -------

Net Cash Used in Financing Activities                                               (277)           (2,246)
                                                                                 -------           -------

Net increase in cash and cash equivalents                                            924                99
Cash and cash equivalents, beginning of period                                    45,894            31,122
                                                                                 -------           -------
Cash and cash equivalents, end of period                                         $46,818           $31,221
                                                                                 =======           =======
</TABLE>


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



<PAGE>
                            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, 1999 and May 2, 1998 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 1998 Annual
Report and 1998 Form 10-K. In the opinion of management, the accompanying
consolidated financial statements reflect all adjustments necessary (which are
of a normal recurring nature) 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.


2.      Net Income Per Share

        At the end of fiscal 1997, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 128 "Earnings 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 plus the dilution of stock options.

        Options to purchase approximately 60,000 shares of common stock at
prices ranging from $10.12 to $26.75 per share were outstanding as of May 1,
1999 but were not included in the computation of diluted net income per share
because the exercise prices were greater than the average market price of the
common shares.



<PAGE>


3.      Financing Arrangements

        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 1, 1994. The loan is collateralized by a mortgage on
the national distribution center owned by the Company in Troy, Ohio.

        In 1993, the Company executed a ten-year $7.0 million note bearing
interest at 7.3%. Interest and principal are payable in equal monthly
installments beginning November 1993. The note is collateralized by the material
handling equipment in the distribution center.

        The Company and United Retail Incorporated, its subsidiary,
(collectively, the "Companies") are parties to a Financing Agreement, dated
August 15, 1997, as amended September 15, 1997 (the "Financing Agreement"), with
The CIT Group/Business Credit, Inc.("CIT"). The Financing Agreement, which was
extended in March 1999 to August 15, 2001, provides a revolving line of credit
in the aggregate amount of $40 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 either 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
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.

        In the event a loan is made to one of the Companies, interest is payable
monthly based on a 360-day year at the prime rate or at two percent plus the
LIBOR rate on a per annum basis, at the borrower's option.

        The line of credit is secured by a security interest in inventory and
proceeds and by the balance on deposit from time to time in an account that has
been pledged to the lenders.

        At May 1, 1999, the combined availability of the Companies was $18.8
million, no balance was in the pledged account, the aggregate outstanding amount
of letters of credit arranged by CIT was $20.5 million and no loan had been
drawn down. The Company's cash on hand was unrestricted.



<PAGE>


4.      Income Taxes

        The provision for income taxes consists of (dollars in thousands):

                                        Thirteen Weeks Ended
                                        --------------------
                                       May 1,           May 2,
                                       1999              1998
                                      ------            ------
Currently payable:
        Federal                       $2,552            $1,012
        State                            119                56
                                      ------            ------
                                       2,671             1,068
                                      ------            ------
Deferred:
        Federal                          316             1,411
        State                             68               304
                                      ------            ------
                                         384             1,715
                                      ------            ------

                                      $3,055            $2,783
                                      ======            ======

        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
                                  ---------------------------------------------
                                        May 1, 1999              May 2, 1998
                                        -----------              -----------

Tax at Federal rate               $  2,910       35.0%      $  2,573      35.0%
State income taxes, net of
 federal benefit                       122        1.4%           234       3.2%
Goodwill amortization                   18        0.2%            18       0.2%
Other                                    5        0.1%           (42)     (0.6%)
                                  --------       ----       --------      ----

                                  $  3,055       36.7%      $  2,783      37.8%
                                  ========       ====       ========      ====


<PAGE>



     The net deferred tax asset reflects the tax impact of temporary
differences. The components of the net deferred tax asset as of May 1, 1999 are
as follows (dollars in thousands):


         Assets:
                  Inventory                                $  218
                  Accruals and reserves                     2,705
                  Compensation                                339
                                                           ------
                                                            3,262
                                                           ------
         Liabilities:
                  Depreciation                              2,526
                                                           ------
                                                            2,526
                                                           ------

                  Net deferred tax asset                  $   736
                                                          =======

        Future realization of the tax benefits attributable to these existing
deductible temporary differences ultimately depends on the existence of
sufficient taxable income within the carryforward period available under the tax
law at the time of the tax deduction. Based on management's assessment, it is
more likely than not that the net deferred tax asset will be realized through
future taxable earnings or available carrybacks.

        The Company's federal income tax returns for fiscal 1994, fiscal 1995
and fiscal 1996 are being audited by the Internal Revenue Service. Management
believes that the results of the audits will not have a material adverse effect
on the Company's financial condition or results of operations.


5.      Advances To Officers

     Raphael Benaroya, the Chairman of the Board, President and Chief Executive
Officer of the Company, and George R. Remeta, the Vice Chairman and Chief
Financial Officer of the Company, borrowed money from the Company to finance
taxes arising from their exercises of employee stock options on February 13,
1998. (The advances had previously been authorized by the Compensation
Committee.) In Fiscal 1998, advances were made of approximately $1.6 million to
Mr. Benaroya and $0.2 million to Mr. Remeta. In Fiscal 1999, an additional
advance of approximately $0.1 million was made to Mr. Benaroya. Interest is
payable annually at the prime rate. Accrued interest at February 13, 1999 has
been paid in full in the respective amounts of approximately $137,000 for Mr.
Benaroya and $21,000 for Mr. Remeta. The largest amounts outstanding were
approximately $1.7 million from Mr. Benaroya and $0.2 million from Mr. Remeta,
respectively, which remain outstanding. The advances mature on February 13, 2002
subject to acceleration under certain circumstances and to a call by the Company
on February 13, 2000 with respect to half of the principal amount. Payment of
the advances is secured by a pledge of the shares of the Company's Common Stock
issued upon the option exercises in the respective amounts of 777,925 shares
issued to Mr. Benaroya and 116,888 shares issued to Mr. Remeta. Each advance is
a full recourse obligation of the borrower.



<PAGE>

6.      Supplemental Cash Flow Information

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

                                                       Thirteen Weeks Ended
                                                      -----------------------
                                                       May 1,          May 2,
                                                       1999             1998
                                                       ----             ----

Cash interest:

Interest income, net
per statements of operations                          ($347)           ($140)

Less: Non-cash
interest expense                                         20               11
                                                      -----            -----
Net cash interest income
including interest
income of $587 and $438                               ($367)           ($151)
                                                      -----            -----
Net income tax
payments                                              $  54             $449
                                                      =====            =====

Financing activities for the thirteen weeks ended May 2, 1998 include the
non-cash exercise of 1,076,955 stock options, with the exercise price paid by
exchanging common stock held equal to the cash payment due.

7.      Contingency Footnote

        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 or results of operations.

8.      Subsequent Event

        In May 1999, at the annual meeting of stockholder's of the Company, the
stockholders approved the adoption of the 1999 Stock Option Plan, including a
stock option reserve of 400,000 shares of common stock.






<PAGE>


Item 2.                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

First Quarter Fiscal 1999 Versus First Quarter Fiscal 1998

         Net sales for the first quarter of Fiscal 1999 increased 1.8% from the
first quarter of Fiscal 1998, to $96.7 million from $94.9 million, from an
increase in the unit volume. Average stores open decreased 3.8% from 522 to 502
as underperforming stores were closed selectively. Comparable store sales for
the quarter increased 4.6%. There is no assurance that sales and comparable
store sales will continue to increase.

         Gross profit was $27.0 million in the first quarter of Fiscal 1999
compared with $27.1 million in the first quarter of Fiscal 1998, decreasing as a
percentage of net sales to 27.9% from 28.6%. The decrease in gross profit as a
percentage of net sales was primarily attributable to a decrease in the
merchandise margin rate partially offset by a decrease in buying and occupancy
costs as a percentage of net sales.

         General, administrative and store operating expenses were $19.0 million
in the first quarter of Fiscal 1999 compared to $19.9 million in the first
quarter of Fiscal 1998, decreasing principally as a result of reduced insurance
expense. As a percentage of net sales, general, administrative and store
operating expenses decreased to 19.7% from 21.0%.

         During the first quarter of Fiscal 1999, the Company had operating
income of $8.0 million (8.3% of sales) compared to operating income of $7.2
million in the first quarter of Fiscal 1998.

         Net interest income was $0.3 million in the first quarter of Fiscal
1999 and $0.1 million in the first quarter of Fiscal 1998, primarily from
interest earned on a higher level of cash and cash equivalents.

         The Company had a provision for income taxes of $3.1 million in the
first quarter of Fiscal 1999 and $2.8 million in the first quarter of Fiscal
1998. The effective rate changed to 36.7% in the first quarter of Fiscal 1999
from 37.8% in the first quarter of Fiscal 1998.

         The Company had net income of $5.3 million for the first quarter of
Fiscal 1999 and $4.6 million for the first quarter of Fiscal 1998.












<PAGE>


Liquidity and Capital Resources

         Net cash provided from operating activities in the first quarter of
Fiscal 1999 was $6.0 million.

         The Company's cash on hand increased to $46.8 million at May 1, 1999
from $45.9 million at January 30, 1999 and $31.2 million at May 2, 1998.

         Inventory increased to $50.8 million at May 1, 1999 from $48.3 million
at May 2, 1998 and $45.6 million at January 30, 1999. The Company's inventory
levels peak in early May and November/December. During Fiscal 1998, the highest
inventory level was $54.2 million.

         Import purchases are made in U.S. dollars, are generally financed by
trade letters of credit and generally constitute approximately half of total
purchases.

         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.

         United Retail Group, Inc. and United Retail Incorporated, its
subsidiary (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 a
revolving line of credit for a term ending August 15, 2001 in the aggregate
amount of $40 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 either of the Companies to support trade letters of credit
and standby letters of credit and to finance loans. As of May 1, 1999, trade
letters of credit for the account of the Company and supported by CIT were
outstanding in the amount of $18.0 million. (A standby letter of credit
supported by CIT was also outstanding for $2.0 million as collateral for
obligations in the ordinary course of business under general liability insurance
policies.)

         Subject to the following paragraph, the availability of credit (within
the aggregate $40 million line of credit) to either 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 either 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 60% to 65% depending on the season, and (y) the balance in an account in
its name that has been pledged to the lenders (a "Pledged Account"). (At May 1,
1999, the combined availability of the Companies was $18.8 million; no balance
was in a Pledged Account; no loan had been drawn down; and the Company's cash on
hand was unrestricted.)

         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.

         In the event a revolving loan is made to one of the Companies, interest
is payable monthly based on a 360-day year at the prime rate or at two percent
plus the LIBOR rate on a per annum basis, at the borrower's option.

         The line of credit is secured by a security interest in inventory and
proceeds and by the balance from time to time in the Pledged Account.


<PAGE>

         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, acquiring Common Stock or preferred stock of the Company, making
loans, engaging in certain transactions with affiliates, or consolidating,
merging or making acquisitions outside the ordinary course of business.

         The Company believes that its cash on hand, the availability of credit
under the Financing Agreement and cash flows from operating activities will be
adequate to meet anticipated working capital needs, including seasonal financing
needs, for the next 12 months. This paragraph constitutes forward-looking
information under the 1995 Private Securities Litigation Reform Act (the "Reform
Act") and is subject to the uncertainties and other risk factors referred to
under the caption "Future Results."

Stores

         The Company leased 502 retail stores at May 1, 1999, of which 299
stores were located in strip shopping centers, 180 stores were located in malls
and 23 stores were located in downtown shopping districts. Total retail square
footage was 2.0 million square feet at May 1, 1999 compared to 2.1 million
square feet a year earlier.

         A total of 303 stores are operated by the Company under trade names
that predate the AVENUE(R) trade name now used on new stores and remodeled
stores. Approximately 300 of these stores are scheduled to be converted to the
AVENUE(R) trade name in Fiscal 1999.

         In Fiscal 1999, the Company intends to pay the costs of opening new
stores, remodeling certain existing stores and changing the signage on
approximately 300 stores from its cash on hand.

         The two preceding paragraphs contain forward-looking information under
the Reform Act, which is subject to the uncertainties and other risk factors
referred to under the caption "Future Results".

Tax Matters

         The Company's federal income tax returns for Fiscal 1994, Fiscal 1995
and Fiscal 1996 are being audited by the Internal Revenue Service. Management
believes that the results of the audit will not have a material adverse effect
on the Company's financial condition or results of operations.

Renovating Computerized Systems and Replacing Embedded Technology

         The Company operates a nationwide chain of specialty apparel retail
stores, imports a significant portion of its inventory, and makes proprietary
credit cards available to its customers. The Company's operations are heavily
dependent on date sensitive computerized systems and embedded technology,
including (i) its management information systems, (ii) the technology, including
microcontrollers, embedded in equipment at the Company's national distribution
center, (iii) the system for issuing and processing a trade letter of credit for
each of the Company's purchase orders used by the bank (the "Letter of Credit
Provider") that finances the Company's purchases of inventory abroad and (iv)
links to another bank (the "Credit Card Bank") to authorize purchases by
customers using the Company's proprietary credit cards. The Company's
headquarters uses a date sensitive voicemail system. The Company's headquarters
and stores are leased and are generally affected by date sensitive embedded
technology used to control heating and ventilation and lighting.

         Generally, computer programs and embedded technology often will
mishandle data that includes a year after 1999 (referred to below as "Year 2000
risks").

         The mainframe operating systems used by the Company's vendor have been
represented by the vendor to be Year 2000 compliant in all material respects.
<PAGE>

         The Company's management information systems department (the "MIS
Department") has renovated substantially all of the Company's applications
software, systems software and hardware (collectively referred to below as
"Systems") to accommodate dates after 1999.

         Integrated Year 2000 testing of substantially all the Systems that are
essential to the Company's management information systems ("Essential Systems")
and the mainframe operating systems was completed successfully. (There is no
assurance, however, that the integrated testing revealed all Year 2000 risks.)
The few untested Essential Systems are scheduled to be renovated and tested
separately during the second quarter of Fiscal 1999. (The renovation, validation
and testing of the Essential Systems are referred to below as the "Year 2000
Project.")

         The Company has obtained representations from the manufacturers of the
equipment that performs essential functions at the national distribution center
to the effect that the equipment is Year 2000 compliant in all material
respects. There is no assurance, however, that all the essential equipment at
the national distribution center will function properly after 1999 or that any
malfunctions that occur will not have a material adverse effect on the Company's
logistics operations.

         The Letter of Credit Provider has advised the Company that its trade
letter of credit system and telecommunications interfaces are Year 2000
complaint in all material respects. There is no assurance, however, that such
system and interfaces will function properly after 1999.

         The Credit Card Bank has advised the Company that its credit card
transaction processing system has been renovated, and certified to be Year 2000
compliant in all material respects. The Credit Card Bank also stated that it has
assessed its telecommunications interfaces for point of sale credit
authorizations and is in the process of renovating them to make them Year 2000
compliant in all material respects by June 30, 1999. There is no assurance,
however, that these processing systems and telecommunications interfaces will
function properly after 1999 or that any malfunctions that occur will not have a
material adverse effect on the Company's sales.

         The Company will replace its voicemail system in 1999 with one that is
guaranteed to be Year 2000 compliant by the manufacturer.

         The Company believes that in most cases the embedded technology used in
energy management systems to control heating and ventilation and lighting at its
headquarters and its stores can quickly be bypassed manually in the event of a
malfunction because of an inability to accommodate dates after 1999. There is no
assurance, however, that any malfunctions that occur will not have a material
adverse effect on the Company's operations.

         The Company does not have a project tracking system for the time that
its associates spend on the Year 2000 Project. The Company's internal costs for
the Year 2000 Project are principally the related payroll costs for the MIS
Department, estimated to have been $0.8 million from February 3, 1996 to May 1,
1999, of which $0.1 million is estimated to have been expensed in the first
quarter of Fiscal 1999. The cost of special purchases for the Year 2000 Project
was approximately $0.6 million, substantially all of which was incurred in
Fiscal 1998. Amounts equal to the internal and external costs of the Year 2000
Project, however, probably would have been spent on other software development
projects, if the Year 2000 Project had not been necessary. Other software
development projects deferred because of the Year 2000 Project probably would
have improved the Company's operational efficiency but management does not
believe that any of the deferred operational improvements would have been
material to its operations.

         Budgeted MIS Department payroll costs and special purchases for the
Year 2000 Project, including a voicemail system, in Fiscal 1999 are not material
in relation to the Company's general, administrative and store operating
expenses in Fiscal 1998. However, there is no assurance that unexpected
additional costs will not be incurred.

<PAGE>

         The inability of computerized systems and embedded technology in
general to accommodate dates after 1999 may cause disruptions in the United
States and abroad in the telecommunications, banking, credit card,
transportation, utilities and apparel manufacturing industries and in government
services. If such disruptions occur, they could have a material adverse effect
on the entire specialty apparel retail industry, including the Company. The
Company has not assessed industry-wide Year 2000 risks that are not unique to
the Company's operations. The Company's contingency plan for Year 2000 risks
that might affect the entire industry is to have multiple, geographically
diverse vendors of each major category of goods, to the extent feasible. The
Company will address industry-wide Year 2000 risks on an ad hoc basis as
problems arise, principally by shifting purchase orders to vendors that are less
troubled by Year 2000 problems than their competitors. There is no assurance,
however, that any vendors will be Year 2000 compliant.

         There is no commercially viable alternative course of action, so the
Company will not develop contingency plans for prolonged failure of its
Essential Systems and lengthy constructive eviction from its headquarters. Such
Systems failure and constructive eviction would have a material adverse effect
on the Company's results of operations, net cash provided from operating
activities and financial condition.

         The Company's contingency plan for Year 2000 risks at its national
distribution center is to replace as quickly as possible any essential equipment
that malfunctions because of inability to accommodate dates after 1999. There is
no assurance, however, that Year 2000 compliant replacement equipment will be
available.

         The Company's contingency plan with respect to the unavailability of a
trade letter of credit for each of the Company's purchase orders is to deliver
blanket trade letters of credit to the Company's major foreign vendors, by
courier, if necessary. (A blanket trade letter of credit would finance all
Company purchase orders to be given to the vendor.)

         The Company's contingency plan with respect to downtime in proprietary
credit card operations by the Credit Card Bank is to continue credit sales on
the Company's own account with its own systems until the Credit Card Bank
resumes operations or is replaced by another bank. While other banks would be
available to replace the Credit Card Bank, there is no assurance that any bank
will be Year 2000 compliant.

         The Company has contingency plans with respect to heating and
ventilation and lighting controls in its stores that have malfunctioned because
of an inability to accommodate dates after 1999. For stores located in strip
shopping centers, the Company will arrange as quickly as possible for local
maintenance contractors to bypass manually any controls that have malfunctioned.
There is no assurance, however, that local maintenance contractors will have
time available to bypass controls that have malfunctioned. For stores located in
malls and downtown shopping districts, the Company will promptly notify
landlords of systems that have malfunctioned and request immediate restoration
of service. There is no assurance, however, that landlords will be able to
restore service. In the case of any unheated stores that have lights, the
Company will also ask store managers to keep the stores open if weather
conditions permit.

         There is no assurance that the Company's contingency plans will
diminish the possible adverse consequences of Year 2000 risks.




<PAGE>



         The Company believes that a reasonably likely worst case scenario
resulting from Year 2000 risks that are unique to its operations would be a
decline in net sales for the fourth quarter of Fiscal 1999 having a material
adverse effect on the Company's results of operations and net cash provided from
operating activities for that quarter but not on the Company's financial
condition (see, "-Liquidity"). While management does not believe that such risks
will have a material adverse effect on the Company's operations in Fiscal 2000,
there is no assurance that such risks will not have such a material adverse
effect, regardless of the Company's remediation efforts and contingency plans.
Further, there is no assurance that Year 2000 risks that affect the entire
specialty apparel retail industry, and not just the Company, will not have a
material adverse effect on the Company's operations in Fiscal 1999 and Fiscal
2000.

         Certain of the 18 preceding paragraphs contain forward-looking
information under the Reform Act, which is subject to the uncertainties and
other risk factors referred to under the caption "Future Results."

Future Results

         Future results could differ materially from those currently anticipated
by the Company due to unforeseeable problems that might arise and possible (i)
miscalculation of fashion trends, (ii) shifting shopping patterns, both within
the specialty store sector and in other channels of distribution, (iii) extreme
or unseasonable weather conditions, (iv) disruptions in the telecommunications,
banking, credit card, transportation, utilities and apparel manufacturing
industries in the United States and abroad caused by the inability of their
computerized systems and embedded technology to accommodate dates after 1999,
(v) economic downturns, weakness in overall consumer demand, and variations in
the demand for women's fashion apparel, (vi) imposition by vendors, or their
third-party factors, of more onerous payment terms for domestic merchandise
purchases, (vii) acceleration in the rate of business failures and inventory
liquidations in the specialty store sector of the women's apparel industry, and
(viii) disruptions in the sourcing of merchandise abroad, including (a)
political instability and economic distress in South Asia, (b) China's claims to
sovereignty over Taiwan, (c) North Korea's claims to sovereignty over South
Korea, (d) exchange rate fluctuations, (e) trade sanctions or restrictions, (f)
changes in quota and duty regulations, (g) delays in shipping, (h) increased
costs of transportation or (i) disruptions in government services in the United
States and abroad caused by the inability of computerized systems and embedded
technology to accommodate dates after 1999, including delays in the issuance by
the United States Customs Service of clearances on imported merchandise.









<PAGE>



                           PART II - OTHER INFORMATION


Item 2.  Changes in Securities.

         (c) Seven stock options to purchase 3,000 shares each of the Company's
common stock were issued on May 26, 1999 without registration under the
Securities Act of 1933 (the "Securities Act"). The options were formula options
granted pursuant to the 1999 Stock Option Plan exercisable at $15.125 per share.

         The grantees were non-employee directors of the Company.

         The options become exercisable in five equal annual installments
commencing one year after the date of grant.

         The above grants were exempt from the registration provisions of the
Securities Act under Section 4(2) thereof because all the grantees are directors
of the issuer. Nevertheless, the Company intends to file a registration
statement with respect to the options before they become exercisable.

Item 4.   Submission of Matters to a Vote of Security Holders.

         (a) The seventh Annual Meeting of Stockholders (the "Meeting") was held
on May 26, 1999.

         (c) The Meeting elected directors for terms ending at the eight Annual
Meeting of Stockholders, by the following vote:

     Name                       For                   Withhold Authority to Vote
     ----                       ---                   --------------------------

     Joseph A. Alutto           11,039,347             17,017
     Raphael Benaroya           11,040,947             15,417
     Russell Berrie             10,571,904            484,460
     Joseph Ciechanover         10,569,064            487,300
     Michael Goldstein          11,042,347             14,017
     Ilan Kaufthal              11,042,347             14,017
     Vincent P. Langone         11,040,147             16,217
     George R. Remeta           11,041,447             14,917
     Richard W. Rubenstein      11,042,347             14,017

         (d) The adoption of the 1999 Stock Option Plan (the "1999 Plan") was
approved at the Meeting by a vote of 10,273,621 for, 776,822 against and 5,921
abstain. The 1999 Plan is incorporated herein by reference to the appendix to
the Company's proxy statement on Schedule 14A for its 1999 Annual Meeting of
Stockholders.





<PAGE>

Item 6.  Exhibits

         The following exhibits are filed herewith:

         Number              Description
         ------              -----------

         4.1                 Amended By-Laws of the Corporation
         27                  Financial Data schedule

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

          Number in Filing   Description
          ----------------   -----------

          10.1               Amendment, dated March 29, 1999, to Financing
                             Agreement among the Corporation, United Retail
                             Incorporated and The CIT Group/Business Credit,
                             Inc. ("CIT")
          10.2               Financial Statements of Retirement Savings Plan for
                             year ended December 31, 1998
          13                 Sections of 1998 Annual Report to Stockholders
                             (including opinion of Independent Public
                             Accountants) that are incorporated by reference in
                             response to the items of the Annual Report on Form
                             10-K
          21                 Subsidiaries of the Corporation

          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*              Employment Agreement, dated November 20, 1998,
                             between the Corporation and Raphael Benaroya
          10.2*              Employment Agreement, dated November 20, 1998,
                             between the Corporation and George R. Remeta
          10.3*              Employment Agreement, dated November 20, 1998,
                             between the Corporation and Kenneth P. Carroll
          10.4*              Employment Agreement, dated March 26, 1998, between
                             the Corporation and Carrie Cline-Tunick and
                             amendment thereto.

         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


<PAGE>

         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 Program Agreement, dated
                             January 27, 1998, between the Corporation, United
                             Retail Incorporated and World Financial Network
                             National Bank (Confidential portions have been
                             deleted and filed separately with the Secretary of
                             the Commission)
          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
          10.7*              Restated 1989 Performance Option Plan as of May 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 among the Corporation, United Retail
                             Incorporated and CIT

         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, dated August 15, 1997, among
                             the Corporation, United Retail Incorporated and CIT
          10.2*              Amendment No. 1 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 exhibit to the Corporation's Quarterly Report on Form
10-Q for the period ended May 4, 1996 is incorporated herein by reference:

          Number in Filing   Description
          ----------------   -----------

          10.3               Amended and Restated Term Sheet Agreement for
                             Hosiery, dated as of December 29, 1995, between The
                             Avenue, Inc. and American Licensing Group, Inc.
                             (Confidential portions have been deleted and filed
                             separately with the Secretary of the Commission)
<PAGE>

          The following exhibits to the Corporation's Amended Current Report on
Form 8-KA, dated May 22, 1995, are incorporated herein by reference:

          Number in Filing   Description
          ----------------   -----------

          10.1               Amended and Restated Gloria Vanderbilt Intimate
                             Apparel Sublicense Agreement, dated May 22, 1995,
                             between United Retail Incorporated and American
                             Licensing Group Limited Partnership ("ALGLP")
          10.2               Gloria Vanderbilt Sleepwear Sublicense Agreement,
                             dated May 22, 1995, between United Retail
                             Incorporated and ALGLP

          The following exhibit to the Corporation's Annual Report on Form 10-K
for the year ended January 28, 1995 is incorporated herein by reference:

          Number in Filing   Description
          ----------------   -----------

          10.1*              Incentive Compensation Program Summary

         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 Registrant
         4.1                 Specimen Certificate for Common Stock of Registrant
         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)
         10.2.2              Amendment to Software License Agreement, dated
                             December 10, 1991
         10.7                Amended and Restated Gloria Vanderbilt Hosiery
                             Sublicense Agreement, dated as of April 30, 1989,
                             between American Licensing Group, Inc. (Licensee)
                             and Sizes Unlimited, Inc. (Sublicensee)
         10.12               Amended and Restated Master Affiliate Sublease
                             Agreement, dated as of July 17, 1989, among Lane
                             Bryant, Inc., Lerner Stores, Inc. (Landlord) and
                             Sizes Unlimited, Inc. (Tenant) and Amendment
                             thereto, dated July 17, 1989
         10.33*              1991 Stock Option Agreement, dated November 1,
                             1991, between the Corporation and Raphael Benaroya
         10.34*              1991 Stock Option Agreement, dated November 1,
                             1991, between the Corporation and George R. Remeta
         10.38               Management Services Agreement, dated August 26,
                             1989, between American Licensing Group, Inc. and
                             ALGLP
         10.39               First Refusal Agreement, dated as of August 31,
                             1989, between the Corporation and ALGLP
--------------------

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

         (b) No Current Reports on Form 8-K were filed by the Corporation during
the fiscal quarter ended May 1, 1999.



<PAGE>


                                   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.
            --------------------------------------------------------------------

                  By:  /s/ GEORGE R. REMETA
                       ------------------------------------------------------
                       George R. Remeta, Vice Chairman of the Board and Chief
                             Financial Officer - Authorized Signatory

                  By:   /s/ JON GROSSMAN
                      -------------------------------------------------------
                      Jon Grossman, Vice President  - Finance and Chief
                              Accounting Officer

Date:                 June 9, 1999





<PAGE>

                                  EXHIBIT INDEX

         The following exhibits are filed herewith:

         Number              Description
         ------              -----------

         4.1                 Amended By-Laws of the Corporation
         27                  Financial Data schedule

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

          Number in Filing   Description
          ----------------   -----------

          10.1               Amendment, dated March 29, 1999, to Financing
                             Agreement among the Corporation, United Retail
                             Incorporated and The CIT Group/Business Credit,
                             Inc. ("CIT")
          10.2               Financial Statements of Retirement Savings Plan for
                             year ended December 31, 1998
          13                 Sections of 1998 Annual Report to Stockholders
                             (including opinion of Independent Public
                             Accountants) that are incorporated by reference in
                             response to the items of the Annual Report on Form
                             10-K
          21                 Subsidiaries of the Corporation

          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*              Employment Agreement, dated November 20, 1998,
                             between the Corporation and Raphael Benaroya
          10.2*              Employment Agreement, dated November 20, 1998,
                             between the Corporation and George R. Remeta
          10.3*              Employment Agreement, dated November 20, 1998,
                             between the Corporation and Kenneth P. Carroll
          10.4*              Employment Agreement, dated March 26, 1998, between
                             the Corporation and Carrie Cline-Tunick and
                             amendment thereto.

         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
<PAGE>

         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 Program Agreement, dated
                             January 27, 1998, between the Corporation, United
                             Retail Incorporated and World Financial Network
                             National Bank (Confidential portions have been
                             deleted and filed separately with the Secretary of
                             the Commission)
          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
          10.7*              Restated 1989 Performance Option Plan as of May 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 among the Corporation, United Retail
                             Incorporated and CIT

         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, dated August 15, 1997, among
                             the Corporation, United Retail Incorporated and CIT
          10.2*              Amendment No. 1 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 exhibit to the Corporation's Quarterly Report on Form
10-Q for the period ended May 4, 1996 is incorporated herein by reference:

          Number in Filing   Description
          ----------------   -----------

          10.3               Amended and Restated Term Sheet Agreement for
                             Hosiery, dated as of December 29, 1995, between The
                             Avenue, Inc. and American Licensing Group, Inc.
                             (Confidential portions have been deleted and filed
                             separately with the Secretary of the Commission)

<PAGE>

          The following exhibits to the Corporation's Amended Current Report on
Form 8-KA, dated May 22, 1995, are incorporated herein by reference:

          Number in Filing   Description
          ----------------   -----------

          10.1               Amended and Restated Gloria Vanderbilt Intimate
                             Apparel Sublicense Agreement, dated May 22, 1995,
                             between United Retail Incorporated and American
                             Licensing Group Limited Partnership ("ALGLP")
          10.2               Gloria Vanderbilt Sleepwear Sublicense Agreement,
                             dated May 22, 1995, between United Retail
                             Incorporated and ALGLP

          The following exhibit to the Corporation's Annual Report on Form 10-K
for the year ended January 28, 1995 is incorporated herein by reference:

          Number in Filing   Description
          ----------------   -----------

          10.1*              Incentive Compensation Program Summary

         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 Registrant
         4.1                 Specimen Certificate for Common Stock of Registrant
         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)
         10.2.2              Amendment to Software License Agreement, dated
                             December 10, 1991
         10.7                Amended and Restated Gloria Vanderbilt Hosiery
                             Sublicense Agreement, dated as of April 30, 1989,
                             between American Licensing Group, Inc. (Licensee)
                             and Sizes Unlimited, Inc. (Sublicensee)
         10.12               Amended and Restated Master Affiliate Sublease
                             Agreement, dated as of July 17, 1989, among Lane
                             Bryant, Inc., Lerner Stores, Inc. (Landlord) and
                             Sizes Unlimited, Inc. (Tenant) and Amendment
                             thereto, dated July 17, 1989
         10.33*              1991 Stock Option Agreement, dated November 1,
                             1991, between the Corporation and Raphael Benaroya
         10.34*              1991 Stock Option Agreement, dated November 1,
                             1991, between the Corporation and George R. Remeta
         10.38               Management Services Agreement, dated August 26,
                             1989, between American Licensing Group, Inc. and
                             ALGLP
         10.39               First Refusal Agreement, dated as of August 31,
                             1989, between the Corporation and ALGLP
--------------------

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