<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   ----------

                                    FORM 10-K

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

                   For the fiscal year ended February 1, 2003

                        Commission file number 333-81307

                                G+G RETAIL, INC.
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

             Delaware                                 22-3596083
   ----------------------------          ---------------------------------------
   (State or other Jurisdiction          (I.R.S. Employer Identification Number)
of Incorporation of organization)

     520 Eighth Avenue, New York, NY                    10018
----------------------------------------              ----------
(Address of Principal Executive Offices)              (Zip Code)

       Registrant's telephone number, including area code: (212) 279-4961

Securities registered pursuant to Section 12(b) of the Act: None.

Securities registered pursuant to Section 12(g) of the Act: None.

     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 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [_]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

     Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes [_] No [X]

     As of April 30, 2003 all of the common stock of the registrant was held by
an affiliate. On April 30, 2003, 10 shares of the registrant's Class B common
stock, par value $.01 were outstanding.





<PAGE>

     As used in this Annual Report on Form 10-K, the terms "we," "us," "our" and
"G+G Retail" mean G+G Retail, Inc. and its subsidiaries, unless the context
indicates a different meaning. The term "common stock" means our Class B common
stock, $.01 par value per share. The term "Holdings" means our parent company,
G&G Retail Holdings, Inc.

     This report contains "forward-looking statements," within the meaning of
the Federal securities laws. These statements describe our beliefs concerning
future business conditions and the outlook for our business based on currently
available information. Wherever possible, we have identified these
forward-looking statements by using words such as "may," "will," "expect,"
"anticipate," "seek," "intend," "believe," "estimate," and similar expressions.
While these statements reflect our current judgment about the direction of our
business, our actual results could differ materially from the estimates,
assumptions and other judgments about future performance contained in the
forward-looking statements due to a number of risks and uncertainties. These
risks and uncertainties include the strength of the women's and girls' apparel
industries and the other risks and uncertainties described under the heading
"Item 1. Risk Factors" below. Forward-looking statements in this report may be
found in the materials set forth under "Item 1. Business," "Item 2. Properties,"
"Item 3. Legal Proceedings" and "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations," among others.

                                     PART I

Item 1. Business

General

     We are a leading national mall-based retailer of popular-price female
apparel. We sell substantially all of our merchandise under private label names,
including Rave, Rave Girl, R4R and Shut Eye, and provide our customers with
fashionable, high quality apparel and accessories at lower prices than brand
name merchandise. We purchase merchandise domestically and seek to keep
inventory lead times short in order to respond quickly to fashion trends and
minimize markdowns. Our pricing strategy, which emphasizes delivering consistent
value to our customers rather than driving sales with periodic promotions, is
also intended to contribute to a low rate of markdowns.

     As of April 2003, we had 577 stores, generally in major enclosed regional
shopping malls, throughout the United States, Puerto Rico and the U.S. Virgin
Islands, which operate primarily under the G+G, Rave and Rave Girl names. We use
the same store format for our G+G/Rave stores and apply this format in all of
our markets. Our G+G/Rave stores average approximately 2,400 square feet and are
designed to create a lively and exciting shopping experience for our teenaged
customers.

     In July 1999, we opened our first Rave Girl store, which sells apparel
primarily for 7- to 12-year-old girls. We believe that the market for the sale
of popular-price fashion apparel to this age group is currently under served. As
of April 2003, we had 107 Rave Girl stores located in 25 states coast to coast
and Puerto Rico. Our Rave Girl stores are approximately 2,000 square feet and
are designed with bright colors, unique lighting and exciting graphics.

     G+G Retail is a Delaware corporation formed in 1998. Our principal
executive offices are located at 520 Eighth Avenue, New York, New York 10018,
telephone number (212) 279-4961. Financial information about G+G Retail is
summarized in "Item 6. Selected Financial Data" and reported in our financial
statements included in this report.


                                       2





<PAGE>

Business Strategy

     Our business strategy is to expand our operations and increase our sales
and earnings through the opening of new stores, through the acquisition of
individual or multiple leases, primarily in mall locations that we believe are
favorable for our business, coupled with increases in same-store sales. During
fiscal years 2001, 2002 and 2003, we opened 68 G+G/Rave stores and 100 Rave Girl
stores. We opened six G+G/Rave stores and three Rave Girl stores to date in
fiscal 2004 and expect to open between 30 and 40 additional stores, in total, in
the fiscal year. We believe that our strong relationships with our existing
landlords provide us with a good opportunity to negotiate favorable lease terms
in new locations.

Merchandising and Marketing

Merchandising Strategy

     Our merchandising strategy is to deliver the latest fashions to our
customers more quickly and at lower prices than our competitors. Our G+G/Rave
store merchandise is designed primarily to appeal to young women between the
ages of 13 and 19 years old who desire fashion, quality and value. However, due
to our merchandise and our geographic diversity, over the past few years our
G+G/Rave stores also have increasingly attracted the 20- to 30-year-old female
customer. Our Rave Girl store merchandise is designed primarily to appeal to the
fashion desires of girls between the ages of 7 and 12 years old and the quality
and value demands of parents who regularly replenish a growing child's wardrobe.
A significant portion of our merchandise is private label and is manufactured to
our specifications. This strategy gives us tighter control over apparel
production and delivery than we would have if we purchased and sold brand-name
merchandise. We seek to offer the latest fashion in both apparel and accessories
in stores that are designed to be bright, energetic and welcoming to create a
fun and enjoyable shopping experience. Our apparel offerings include tops,
bottoms, dresses, lingerie, coordinates, accessories, shoes and outerwear. We
utilize an everyday value pricing strategy, as opposed to offering discounts on
marked-up merchandise.

     In order to react quickly to teenagers and girls' changing tastes and to
keep our stores stocked with current fashions, we purchase most of our
merchandise domestically. Maintaining current merchandise allows us to turn over
our inventory frequently and to achieve high sales per square foot while
improving profitability. The speed of our merchandising and buying capability
enables us to change our product mix in season. As a result, we seek to respond
immediately to, rather than to try to anticipate, fashion trends.

     Our merchandise team identifies and targets fashion trends and customer
demand by, among other things, shopping domestic and foreign markets, reviewing
magazines and catalogs and viewing television shows and movies directed to our
customers, monitoring sell-through trends and attending selected fashion shows.
We also maintain an office in California to ensure proper coverage of the
trend-setting West Coast market. We review inventory levels constantly. Our
planning and distribution staff plans our inventory on a store-by-store basis
and is responsible for understanding the fashion demands of our customers.

Visual Presentation and Advertising

     We believe that effective and strong visual merchandising is critical. Our
goal is to capture a customer's interest in the few seconds that he or she is
exposed to the store front. Merchandise presentation is a product of store
design, use of fixtures and in-store marketing that complements our merchandise.
Our merchants and the marketing department jointly design the merchandise floor
plan, which is integral to merchandise presentation. Once approved, we
communicate a consistent presentation to all of our


                                       3





<PAGE>

G+G/Rave or Rave Girl stores through a formal layout. We finalize the
merchandise layout based on seasonal and climate differences among regional
markets. We prepare major floor changes for each major selling season and sale
period. We forward modifications to the layout to all of our stores on a
bi-weekly basis.

     We primarily advertise in our stores, stressing fashion, quality and value
in support of our everyday value pricing strategy. Our marketing department
creates a seasonal set of store signage and displays that accentuates the
merchandise presentation. Each season, we select and highlight key items with a
comprehensive program of in-store posters and signs. The combination of the
store signage and displays reflect new merchandise colors and fashion trends to
keep the stores looking current and visually stimulating. The merchandise
package also targets the customer with value pricing slogans in the form of
large store-spanning banners and rack-top signs. Our store bags, boxes, name
badges and other store peripherals emphasize our brand recognition.

     Our Internet websites provide information about our merchandise offerings
and store locations. The sites also provide an opportunity for visitors to see
the latest fashion trends for the season as well as available employment
opportunities with our company. The websites' addresses are www.gorave.com and
goravegirl.com. Information provided in our website is not a part of this
report.

Merchandise Planning

     Our financial department prepares seasonal merchandise plans that are
approved by senior management. Our merchandise-planning department then
allocates these plans by merchandise category based on historical and current
trends. The preparation and monitoring of merchandise plans independent of
purchasing functions is essential for controlling inventory levels. We monitor
our inventory through an automated inventory system.

Purchasing and Suppliers

     We purchase our entire inventory from third-party suppliers or
manufacturers. We do not own or operate any manufacturing facilities. The
majority of our private label merchandise is manufactured domestically. We
supply the designs and specifications of much of our private label merchandise
to the manufacturers. Our manufacturers continually consult with us regarding
developing fashion trends so that they can respond quickly to our merchandise
orders. Prior to delivery, we regularly inspect samples of our manufactured
goods for quality based on materials, color and sizing specifications.

     We believe that we have established relationships with an adequate number
of suppliers to meet our ongoing inventory needs and that we have strong
relationships with these suppliers. During fiscal 2003, we purchased our
inventory from more than 400 suppliers. We have been purchasing inventory from
our top three suppliers for more than five years. We do not have long-term
contracts with our suppliers, and we transact business principally on an
order-by-order basis.

Distribution and Transportation

     We maintain a 165,000 square foot leased distribution center in North
Bergen, New Jersey. All of our vendors ship the merchandise that we purchase to
our distribution center, which is then shipped to our stores.

     We employ an internally developed allocation system that interfaces with
our store cash registers, order and receiving system. The allocation system
maintains unit inventory and sales data by store at the style level, enabling us
to identify specific store needs for replenishment. We use national and regional


                                       4





<PAGE>

package carriers to ship merchandise to our stores, and we also use airfreight
to ship merchandise to stores in certain regions. Transit time to stores
generally is two to three days, and merchandise is available for sale by stores
on the day it is received. Therefore, the time period from receipt of goods at
the distribution center to display in our stores is generally less than five
days. A majority of merchandise coming into our distribution center is
pre-ticketed, and a substantial portion of this merchandise is vendor
pre-packed. Pre-ticketing and pre-packing saves time, reduces labor costs and
enhances inventory management.

Locations and Format of Our Stores

Store Locations

     As of April 2003, we had 577 stores in 42 states in the United States,
Puerto Rico and the U.S. Virgin Islands as set forth below:

<TABLE>
<CAPTION>
State/Territory   Number of Stores   State/Territory   Number of Stores
---------------   ----------------   ---------------   ----------------
<S>                      <C>          <C>                     <C>
Alabama                  10           Missouri                12
Arkansas                  2           Nebraska                 1
Arizona                   4           Nevada                   3
California               40           New Hampshire            4
Colorado                 10           New Jersey              21
Connecticut               9           New Mexico               4
Delaware                  2           New York                47
Florida                  64           North Carolina          13
Georgia                  20           Ohio                    19
Hawaii                    1           Oklahoma                 1
Idaho                     1           Oregon                   2
Illinois                 27           Pennsylvania            30
Indiana                   7           Puerto Rico             59
Kansas                    1           Rhode Island             1
Kentucky                  6           South Carolina           5
Louisiana                16           Tennessee                9
Maine                     1           Texas                   38
Maryland                 20           Virginia                12
Massachusetts            18           Virgin Islands           2
Michigan                 15           Washington              11
Minnesota                 2           Wisconsin                2
Mississippi               4           West Virginia            1
</TABLE>

Store Format

     We use a similar store format for our G+G/Rave stores. Our Rave Girl stores
have their own unique store format. We consistently apply our store formats in
all the markets that we serve. In general, the G+G name is used in the New York,
New Jersey and Connecticut markets, and the Rave name is used in other markets.

     Our stores are predominantly located in major enclosed regional shopping
malls. Within such malls, we seek locations for our G+G/Rave stores in proximity
to stores and areas having high teen traffic flow, such as music stores, shoe
stores and food courts. We locate our Rave Girl stores both in major regional
shopping malls and in strip centers where we seek locations in proximity to
other specialty stores


                                       5





<PAGE>

that sell products to young girls. Our G+G/Rave stores are typically 2,400
square feet in size. Our Rave Girl stores are approximately 2,000 square feet.

     Our stores are designed to create a lively and exciting shopping experience
for the customer. All of our stores are bright, colorful and fitted with various
fixtures to display the merchandise in an appealing manner. Approximately 15% of
the total space is committed to fitting rooms and storage space. Our
merchandising staff centrally controls the store layout and merchandise
placement. Typically, we update store and merchandise layouts on a bi-weekly
basis, or sooner when necessary, to stay current with the seasons and fashion
trends.

     Sales have been evenly balanced among our store base, with our highest
volume store accounting for less than 1% of gross sales in recent years.

Store Operations

     Our district/area managers manage all aspects of store operations other
than purchasing. Each of these district/area managers is responsible for
approximately six to ten stores and reports to a regional manager who oversees
seven to eight district/area managers. The regional managers, in turn, report to
our Senior Vice President-Store Operations.

     Generally, each of our stores employs five to ten employees, consisting of
a store manager who is in charge of all aspects of operations, including
recruiting, training, customer service and merchandising, two assistant managers
and sales employees. Store managers report to a district/area manager, and
assistant managers and sales employees report to a store manager. We seek to
hire sales employees who have prior retail sales experience and have an
entrepreneurial spirit. Sales personnel are knowledgeable about our merchandise.
Experienced store managers train our sales personnel and assistant store
managers, and experienced district/area managers train our store managers, in
order to offer customers courteous and knowledgeable service.

     Our customers may pay for merchandise with cash, checks, ATM debit or
third-party credit cards. In July 2002, we introduced our Rave Girl credit card,
which is accepted at our Rave Girl stores. Our merchandise return policy permits
returns to be made within 30 days from the date of purchase. We give refunds if
the customer has a receipt. Otherwise, we issue a store credit.

Store Openings and Closings

     We have implemented an ongoing program of opening new stores in locations
that we believe are favorable for our business and closing under performing
stores. Since the beginning of fiscal 2003, we have opened 57 stores and have
closed 19 stores. We plan to open between 30 and 40 additional stores, and we
anticipate that we will close approximately 12 stores during fiscal 2004.

     In deciding whether to open or close a store, we project store
profitability based on the following:

     o    location of the store in the mall;

     o    rental rate for the property where the store is or will be located;

     o    performance of other apparel retail stores in the mall;

     o    mall location and whether the particular mall environment is suitable
          for the store;

     o    quality of anchor stores in the mall in which the store is or will be
          located; and

     o    extent of competition from other mall tenants.


                                       6





<PAGE>

Competition

     The retail apparel business is highly competitive, with fashion, quality,
price, location, store environment and customer service being the principal
competitive factors. We compete with a number of mall-based popular-price junior
and girls fashion retailers. Our competitors in the junior and girls retail
apparel businesses, respectively, include Wet Seal, Inc. and Limited Too, Inc.,
both of which are mall-based apparel retailers that offer current fashions at
generally higher price points than we offer. In addition, we compete with
several discount department stores, local and regional department store chains
and other apparel retailers that overlap with our merchandise offerings and
price points. Some of our competitors are larger and may have greater financial,
marketing and other resources than we have. In addition, we compete for
favorable site locations and lease terms in shopping malls.

Seasonality

     Our fourth fiscal quarter, which includes the Christmas shopping season,
historically accounts for the largest percentage of our annual net sales. Our
first fiscal quarter historically accounts for the smallest percentage of annual
net sales. See "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Seasonality and Quarterly Results."

Management Information Systems

     Our management information and control systems provide our management,
buyers, planners and distributors with information by the next business day that
they may use to analyze and identify sales trends, replenish depleted store
inventories, re-price merchandise and monitor merchandise mix. Our automated and
integrated allocation and material handling systems enable us to move the
majority of our merchandise through our distribution center within 24 hours of
receipt.

     All of our stores have point-of-sale terminals that record sales at the
style level, markdowns, distribution center receipts, interstore transfers and
store payroll. This information is transmitted daily to our headquarters.

Trademarks and Service Marks

     We own various trademarks, service marks and trade names, including G+G,
Rave, Rave Girl, Rave City, R4R, In Charge, American High and Shut Eye. Such
marks, especially our G+G, Rave and Rave Girl marks, are important to our store
and merchandise marketing.

Employees

     As of April 2003, we had a total of approximately 4,900 employees,
consisting of approximately 800 full-time salaried employees, approximately
1,200 full-time hourly employees and approximately 2,900 part-time hourly
employees. The number of part-time hourly employees fluctuates due to the
seasonal nature of our business.

     As of April 2003, Local 2326 of the UAW/AFL/CIO represented approximately
160 hourly employees in our distribution center. The collective bargaining
agreement covering these employees expires on January 31, 2005. None of our
other employees are members of a union. We consider our relations with both our
union and non-union employees to be satisfactory.


                                       7





<PAGE>

Risk Factors

     We have significant debt. Our level of debt and the resulting amount of
leverage may:

     o    make it more difficult for us to make required payments under our
          outstanding notes and revolving credit facility;

     o    require us to dedicate a substantial portion of cash flow from
          operations to principal and interest payments with respect to our
          debt, thereby reducing the availability of cash flow to fund working
          capital, capital expenditures or other general corporate purposes;

     o    limit our ability to obtain additional financing to fund future
          working capital, capital expenditures and other general corporate
          requirements;

     o    increase our vulnerability to general adverse economic and industry
          conditions;

     o    limit our flexibility in planning for, or reacting to, changes in our
          business and industry; and

     o    place us at a competitive disadvantage compared to our competitors
          that have less debt.

     The junior and girls' retail apparel business is highly competitive. We
compete for sales in the junior retail apparel business primarily with specialty
apparel retailers. We also compete with several discount department stores and
local and regional department store chains and other apparel retailers with
which our merchandise offerings and price points overlap. Some of our
competitors are larger and may have greater financial, marketing and other
resources than we do. In addition, we compete with retailers and other
businesses for favorable site locations and lease terms in shopping malls and
strip centers. Competition from our current competitors, as well as from catalog
and Internet retailers, may increase in the future.

     Our profitability largely depends upon our ability to identify the fashion
tastes of our customers and to provide merchandise that appeals to their
preferences in a timely manner. The fashion preferences of our core customers
change frequently. Our failure to identify or react appropriately to changes in
styles or trends could lead to, among other things, excess inventories and
higher markdowns than we expect. In addition, our fashion misjudgments could
decrease our profitability and affect our image with our customers.

     Our continued growth significantly depends upon our ability to open new
stores on a profitable basis and to manage growth and expanded operations.
Accomplishing our expansion goals will depend upon a number of factors,
including the availability of funds and our ability to identify favorable
geographical locations and suitably sized locations for new stores at acceptable
costs.

     General economic conditions, including business conditions, levels of
employment and consumer confidence in future economic conditions affect the
level of consumer spending. In addition, because our stores are located
primarily in malls, we depend upon the continued popularity of malls as shopping
destinations, and the ability of mall anchor tenants and other attractions to
generate customer traffic to our stores. Mall traffic or economic conditions in
the markets in which our stores are located may decline and may result in lower
revenues and profits. A terrorist threat or attack could affect the level of
mall traffic, shopping activity, and/or general economic conditions and have the
same result.

     We handle distribution functions for all of our stores from a single
facility. We rely upon our existing management information systems in operating
and monitoring all major aspects of our business. Any significant disruption in
either the operation of our distribution facility or our management information
systems would decrease our profitability.


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<PAGE>

     Our results of operations fluctuate based on the seasons. In addition,
comparisons to prior-period results of operations may not be indicative of
results for future periods. Historically, the fourth fiscal quarter has
generated the largest percentage of our annual net sales. In contrast, the first
fiscal quarter historically has generated the smallest percentage of our net
sales. Our quarterly results of operations also may fluctuate significantly as a
result of a variety of other factors, including the number and timing of store
openings and closings, the level of markdowns taken and the amount of revenue
contributed by new stores.

     Our success depends significantly upon the performance of our senior
management and merchandising staff. The loss of a number of persons in that
group could affect our strategic and operational capabilities.

     A significant number of our stores are located in Florida, California and
the Caribbean. In addition, we plan to open more stores in these areas. As a
result, we are susceptible to fluctuations in our business caused by the severe
weather or natural disasters, which occur from time to time in these geographic
regions. Also, unseasonable weather conditions such as an unusually cold spring
or warm fall may have a negative effect on sales of or profit margin on
seasonable merchandise.

Item 2. Properties

     Our corporate headquarters is located in New York City and consists of
40,000 square feet of leased office space. From our headquarters, we administer
our purchasing, merchandising, finance, store operations, management information
systems, marketing, real estate, human resources and store construction
functions. The lease for our headquarters expires on January 31, 2006. We have
one five-year renewal option under which the rent will be equal to 90% of the
fair market value rent on the premises at the time of renewal.

     As of April 2003, we had 577 stores in 42 states in the United States,
Puerto Rico and the U.S. Virgin Islands. All of our store sites are leased. This
table shows the number of store leases expiring during the years indicated,
assuming the exercise of all available renewal options:

<TABLE>
<CAPTION>
Fiscal Year   Leases Expiring
-----------   ---------------
<S>                 <C>
    2004             80
    2005             63
    2006             87
    2007             62
    2008             34
 thereafter         215
</TABLE>

     As of April 2003, we also had 36 stores with expired leases, many of which
we have reached agreement to extend subject to final documentation. We occupy
those premises on a month-to-month basis. As of April 2003, we leased
approximately 19% and 10% of our stores from our two largest landlords.

     We lease our distribution center located in North Bergen, New Jersey. The
lease expires in August 2004. We have one five-year renewal option under which
the rent will be equal to 90% of the fair market value rent on the premises at
the time of renewal.


                                       9





<PAGE>

Item 3. Legal Proceedings.

     From time to time, we are involved in litigation relating to claims arising
out of our operations in the normal course of business. As of April 30, 2003, we
were not engaged in any legal proceedings that we expect would have a material
adverse effect on us.

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

     None.


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<PAGE>

                                     PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.

     There is no public trading market for our common stock. Holdings is the
only record holder of our common stock. We have not paid any dividends on our
common stock during the last three fiscal years. Holdings has four authorized
classes of common stock, and three authorized series of preferred stock, none of
which are traded publicly. For more information about Holdings stock, see "Item
12. Security Ownership of Certain Beneficial Owners and Management" and "Item
13. Certain Relationships and Related Transactions."

Item 6. Selected Financial Data

     We account for our operations on a fiscal year rather than a calendar year
basis. Each reference in this report to a "fiscal" year means the 52- or 53-week
fiscal year that ends on the Saturday nearest January 31 in the particular
calendar year. Fiscal 2001 consisted of 53 weeks, all other years presented
consisted of 52 weeks. The combined financial statements include the accounts of
G&G Shops, Inc. and stores operated by G&G Shops that were owned by subsidiaries
of Petrie Retail, Inc. through August 28, 1998 and from the consolidated
financial statements of G+G Retail after that date. We purchased the assets of
all of the stores that G&G Shops operated and the trademarks used in that
business in an acquisition that occurred on August 28, 1998.

     We derived the following selected financial and operating data from:

     o    the balance sheet as of August 28, 1998 and the related combined
          statements of operations and cash flows for the seven months ended
          August 28, 1998 from the audited financial statements of the business
          we acquired in the acquisition; and

     o    the consolidated balance sheets as of January 30, 1999, January 29,
          2000, February 3, 2001, February 2, 2002 and February 1, 2003 and the
          related consolidated statements of operations and cash flows for the
          five months ended January 30, 1999, fiscal 2000, 2001, 2002 and 2003
          from our audited financial statements.

     We did not conduct operations from the date of our incorporation on June
26, 1998 to August 28, 1998, when we completed the acquisition. We completed our
private offering of notes on May 17, 1999. On November 2, 1999, the notes that
we issued in the private placement were exchanged for our senior notes.

     Our selected financial and operating data should be read in conjunction
with "Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations" and our combined and consolidated financial statements
and related notes included elsewhere in this report.


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<PAGE>

                                G+G Retail, Inc.
                      Selected Financial and Operating Data

<TABLE>
<CAPTION>
                                             Acquired Assets                     G+G Retail, Inc.
                                             ---------------  -----------------------------------------------------------------
                                              Feb. 1, 1998    Aug. 29, 1998
Dollars in thousands except for sales per      to Aug. 28,     to Jan. 30,   Fiscal Year  Fiscal Year  Fiscal Year  Fiscal Year
gross square foot                                 1998             1999          2000         2001         2002         2003
-----------------------------------------   ----------------  -------------  -----------  -----------  -----------  -----------
<S>                                             <C>            <C>            <C>          <C>          <C>          <C>
Statement of Operations Data:
Net Sales                                       $162,823       $ 131,567      $318,506     $350,040     $380,428     $411,172
Cost of sales (including occupancy costs)        106,056          79,267       196,330      217,032      234,525      252,650
Selling, general, administrative, and
    buying expenses (1)                           49,330          36,170        89,352      107,928      119,893      130,889
Depreciation and amortization expense (2)          2,845           5,141        11,800       13,178       14,824       11,394
                                                --------       ---------      --------     --------     --------     --------
Operating income                                   4,592          10,989        21,024       11,902       11,186       16,239
Interest expense, net                                 --           7,395        12,983       14,012       14,311       14,212
                                                --------       ---------      --------     --------     --------     --------

Income (loss) before extraordinary loss
   and provision (benefit) for income
   taxes                                           4,592           3,594         8,041       (2,110)      (3,125)       2,027
Provision (benefit) for income taxes               1,892           1,581         3,428         (808)      (1,327)         861
                                                --------       ---------      --------     --------     --------     --------

Income (loss) before extraordinary loss            2,700           2,013         4,613       (1,302)      (1,798)       1,166
Extraordinary loss, net of $354 of
   income tax                                         --              --          (450)          --           --           --
                                                --------       ---------      --------     --------     --------     --------
Net income (loss)                               $  2,700       $   2,013      $  4,163     $ (1,302)    $ (1,798)    $  1,166
                                                ========       =========      ========     ========     ========     ========

Other Operating Data:
Sales per gross square foot (3)                 $    160       $     130      $    296     $    291     $    297     $    307
Inventory turnover (4)                               6.0X            6.5X          5.6X         6.1X         6.2X         6.3X
Same store net sales increase
  (decrease) (5) (6)                                (3.0)%          (1.1)%        (0.5)%       (3.7)%        2.1%         2.6%
Capital expenditures:
   New stores                                   $  1,299       $   1,027      $ 10,200     $ 13,615     $  5,518     $  7,327
   Remodels                                        1,809           1,341         6,680        7,877        4,104        3,732
   POS equipment                                      --              --         2,469        4,164          684          481
   Non-store assets and systems                      292             411         1,276          639        1,234        1,098
                                                --------       ---------      --------     --------     --------     --------
Total capital expenditures                      $  3,400       $   2,779      $ 20,625     $ 26,295     $ 11,540     $ 12,638
                                                ========       =========      ========     ========     ========     ========

Number of stores
   Beginning balance                                 408             415           422          456          511          539
   New stores opened                                   9              13            48           74           46           48
   Existing stores closed                              2               6            14           19           18           17
                                                --------       ---------      --------     --------     --------     --------
   Ending balance                                    415             422           456          511          539          570
                                                ========       =========      ========     ========     ========     ========

Other Financial Data:
EBITDA as adjusted (7)                          $  8,449       $  16,130      $ 32,824     $ 25,080     $ 26,010     $ 27,633
EBITDA margin as adjusted (8)                        5.2%           12.3%         10.3%         7.2%         6.8%         6.7%
Cash provided by operating activities           $ 15,793       $  11,943      $ 20,592     $ 18,908     $ 13,657     $ 20,378
Cash used in investing activities                 (3,400)       (137,658)      (20,625)     (26,295)     (11,540)     (12,638)
Cash (used in) provided by financing
   activities                                    (14,140)        137,069         5,997        2,862       (1,357)      (1,542)
</TABLE>

<TABLE>
<CAPTION>
                                         G+G Retail, Inc.
                       ----------------------------------------------------
                       Jan. 30,   Jan. 29,    Feb. 3,    Feb. 2,    Feb. 1,
Dollars in thousands     1999       2000       2001       2002       2003
--------------------   --------   --------   --------   --------   --------
<S>                    <C>        <C>        <C>        <C>        <C>
Balance Sheet Data:
Total assets           $167,664   $186,742   $197,169   $194,960   $202,868
Total long-term debt     90,000    101,480    104,465    104,166    103,507
</TABLE>


                                       12





<PAGE>

                 Notes to Selected Financial and Operating Data

(1)  Selling, general, administrative and buying expenses include royalty
     expense and store closing expenses. Royalty expense represents an amount
     charged by Petrie Retail for the use of trademarks that we purchased in the
     acquisition.

(2)  Amortization of goodwill was discontinued in fiscal year 2003 in accordance
     with Statement of Financial Accounting Standards ("SFAS") No. 142 "Goodwill
     and Other Intangible Assets", therefore, this expense decreased
     approximately $3.9 million.

(3)  Our sales per gross square foot was $287 for the first 52 weeks of fiscal
     year 2001.

(4)  Calculated by dividing the sum of monthly net retail sales by average
     monthly retail inventory. The fiscal 2000 inventory turn was negatively
     impacted by the off-season inventory purchases made during the fiscal year.
     Without these off-season purchases, inventory turn for fiscal 2000 would
     have been 6.1 times.

(5)  A store becomes comparable after it is open 12 full months.

(6)  Our same store net sales decreased 5.3% for the first 52 weeks of fiscal
     year 2001.

(7)  We define EBITDA as operating income plus depreciation and amortization. In
     addition, we have further adjusted EBITDA to add back royalty expense. See
     note (1). EBITDA as adjusted does not represent cash flow from operations.
     You should not consider EBITDA as adjusted to be an alternative to
     operating or net income computed in accordance with generally accepted
     accounting principles, an indicator of our operating performance, an
     alternative to cash from operating activities as determined in accordance
     with GAAP or a measure of liquidity. We believe that EBITDA is a standard
     measure commonly reported and widely used by analysts, investors and other
     interested parties in the retail industry. As a result, we present this
     information to give you a more complete comparative analysis of our
     operating performance relative to other companies in the industry. Not all
     companies calculate EBITDA using the same methods. Therefore, the EBITDA
     figures as adjusted that we present may not be comparable to EBITDA
     reported by other companies. Below is a reconciliation of EBITDA to Net
     Income:

                                                       (Dollars in Thousands)

<TABLE>
<CAPTION>
                               Feb. 1, 1998   Aug. 29, 1998
                                to Aug. 28,    to Jan. 30,    Fiscal Year   Fiscal Year   Fiscal Year   Fiscal Year
                                   1998           1999           2000          2001          2002          2003
                               ------------   -------------   -----------   -----------   -----------   -----------
     <S>                          <C>            <C>            <C>           <C>           <C>           <C>
     EBITDA                       $8,449         $16,130        $32,824       $25,080       $26,010       $27,633
     Depreciation and
        amortization expense       2,845           5,141         11,800        13,178        14,824        11,394
     Interest expense, net            --           7,395         12,983        14,012        14,311        14,212
     Royalty expense               1,012              --             --            --            --            --
     Provision (benefit) for
       Income taxes                1,892           1,581          3,428          (808)       (1,327)          861
     Extraordinary loss               --              --            450            --            --            --
                                  ------         -------        -------       -------       --------      -------
     Net income (loss)            $2,700         $ 2,013        $ 4,163       $(1,302)      $(1,798)     $ 1,166
                                  ======         =======        =======       =======       ========      =======
</TABLE>

(8)  Computed by dividing EBITDA as adjusted by net sales.

Item 7. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

     You should read the following in conjunction with the selected financial
data and our combined and consolidated financial statements and the related
notes included elsewhere in this report.

Overview

     We are a leading national mall-based retailer of popular-price female
junior and pre-teen apparel. For over 30 years, our predecessors and we have
built a reputation for providing fashion apparel and accessories distinctly
targeted primarily at teenaged women. During fiscal 2000, we began to sell
fashion apparel and accessories targeted at pre-teens aged 7- to 12-years old.


                                       13





<PAGE>

Results of Operations

     The following table sets forth selected operating statement data, expressed
as a percentage of net sales:

<TABLE>
<CAPTION>
                                               Fiscal Year 2001   Fiscal Year 2002   Fiscal Year 2003
                                               ----------------   ----------------   ----------------
<S>                                                  <C>               <C>                <C>
Net Sales                                            100.0%            100.0%             100.0%
Cost of Sales (including occupancy costs)             62.0              61.6               61.5
Selling, general, administrative and buying
   expenses                                           30.8              31.5               31.8
Depreciation and amortization expense                  3.8               3.9                2.8
Operating income                                       3.4               3.0                3.9
Interest expense, net                                  4.0               3.8                3.5
Income (loss) before provision (benefit) for
   income taxes                                       (0.6)             (0.8)               0.4
Net income (loss)                                     (0.4)             (0.5)               0.3
</TABLE>

Comparison of Fiscal 2003 and Fiscal 2002

     Net sales increased to $411.2 million in fiscal 2003 from $380.4 million in
fiscal 2002. The $30.8 million or 8.1% increase in net sales was due to the
opening of new stores, which contributed $21.3 million to the net sales
increase, together with a $9.5 million or 2.6% increase in same store net sales.
The average sales per gross square foot increased 3.4%, to $307 in fiscal 2003
from $297 in fiscal 2002. We operated 570 stores as of February 1, 2003 as
compared to 539 stores as of February 2, 2002. This increase was the result of
opening 48 stores and closing 17 stores during the period.

     Cost of sales, including occupancy costs, increased 7.8% to $252.7 million
in fiscal 2003 from $234.5 million in fiscal 2002. As a percentage of net sales,
cost of sales including occupancy costs decreased 0.1%, from 61.6% in fiscal
2002 to 61.5% in fiscal 2003. The marginal decrease in cost of sales as a
percentage of net sales, was due to an increase in the initial mark on which was
offset by a decrease in vendor allowances received and a slight increase in
markdowns, as a percent of sales in fiscal 2003 as compared to fiscal 2002.
Vendor allowances for fiscal 2003 were $5.0 million, as compared to $5.3 million
in fiscal 2002.

     Selling, general, administrative and buying expenses increased $11.0
million or 9.2% to $130.9 million in fiscal 2003 from $119.9 million, in fiscal
2002. As a percentage of net sales, these expenses increased to 31.8% of sales
in fiscal 2003, as compared to 31.5% in fiscal 2002. The increase in expenses in
fiscal 2003 compared to fiscal 2002 was the result of expenses related to new
and non-comparable stores that were not open a full year in fiscal 2002, an
increase in same store selling expenses and an increase in administrative costs.
In addition, in August 2002, the Company entered into a consulting agreement
with an indirect investor in G & G Retail Holdings, Inc., our parent company.
The agreement provides for an annual consulting fee of $500,000 retroactive to
January 1, 2002. For fiscal 2003, the Company recorded $542,000 of expense in
connection with this agreement.

     Depreciation and amortization expense for fiscal 2003 was $11.4 million
compared to $14.8 million for fiscal 2002. The decrease is the result of the
Company adopting Statement of Accounting Standards ("SFAS") No. 142, Goodwill
and Other Intangible Assets. Under SFAS 142, goodwill and other intangible
assets that have indefinite useful lives are no longer amortized, but are
subject to at least an annual assessment of impairment by applying a fair value
based test, as specified within the SFAS 142. The result of adopting SFAS 142
resulted in a decrease of amortization expense of $3.9 million in fiscal 2003
compared to fiscal 2002. Had the Company been accounting for its goodwill and
indefinite lived assets under SFAS 142 for fiscal 2002, the Company's
depreciation and amortization expense would have been $10.9 million for fiscal
2002.


                                       14





<PAGE>

     Net interest expense in fiscal 2003 was $14.2 million or 3.5% of net sales,
as compared to $14.3 million or 3.8% of net sales for fiscal 2002. The decrease
in interest expense is the result of the Company not borrowing against its
credit facility in fiscal 2003. Net interest expense in both fiscal 2003 and
fiscal 2002 reflect interest on our senior notes, amortization of the $7.3
million original issue discount on our senior notes, the $470,000 value assigned
to the warrants issued by Holdings, the deferred financing costs associated with
the senior notes and interest on our capital leases.

     The income tax provision for fiscal 2003 was $861,000 as compared to a $1.3
million income tax benefit in fiscal 2002. The income tax rate in fiscal 2003
and benefit rate in fiscal 2002 was 42.5%.

     The Company reported a net income of $1.2 million in fiscal 2003 as
compared to a net loss of $1.8 million in fiscal 2002, as a result of the
aforementioned factors.

Comparison of Fiscal 2002 and Fiscal 2001

     Our fiscal year ends on the Saturday closest to January 31 and generally
results in a 52-week fiscal year. However, every five or six years, our fiscal
year is 53 weeks. Fiscal 2001 included 53 weeks. For purposes of annual
comparisons, unless otherwise noted, we have not adjusted for this difference.

     Net sales increased to $380.4 million in fiscal 2002 from $350.0 million in
fiscal 2001. The $30.4 million or 8.7% increase in net sales was due to the
opening of new stores, which contributed $28.2 million to the net sales
increase, together with a $6.9 million or 2.1% increase in same store net sales
(comparing 52 weeks) less $4.7 million applicable to the extra week in fiscal
2001. Average sales per gross square foot increased 2.1%, to $297 in fiscal 2002
from $291 in fiscal 2001. We operated 539 stores as of February 2, 2002 as
compared to 511 stores as of February 3, 2001. This increase was the result of
opening 46 stores and closing 18 stores during the period.

     Cost of sales, including occupancy costs, increased 8.1% to $234.5 million
in fiscal 2002 from $217.0 million in fiscal 2001. As a percentage of net sales,
cost of sales including occupancy costs decreased 0.4%, from 62.0% in fiscal
2001 to 61.6% in fiscal 2002. This 0.4% decrease resulted from a 1.0% decrease
in cost of sales, which was offset by a 0.6% increase in occupancy costs as a
percentage of sales. The decrease in cost of sales as a percentage of net sales
was due to an increase in the initial mark-on and a $1.7 million increase in
vendor allowances received in fiscal 2002 as compared to fiscal 2001, offset in
part by an increase in markdowns. Vendor allowances for fiscal 2002 were $5.3
million, as compared to $3.6 million in fiscal 2001. The occupancy cost increase
as a percent of sales resulted from an overall increase in occupancy costs.

     Selling, general, administrative and buying expenses increased $12.0
million or 11.1% to $119.9 million in fiscal 2002 from $107.9 million, in fiscal
2001. As a percentage of net sales, these expenses increased to 31.5% of sales
in fiscal 2002, as compared to 30.8% in fiscal 2001. Fiscal 2002 expenses
reflect additional selling costs related to new store openings, an increase in
same store selling expenses and an increase in administrative costs.

     Depreciation and amortization expense for fiscal 2002 was $14.8 million
compared to $13.2 million for fiscal 2001. The increase is mainly attributable
to the additional depreciation and amortization expense related to new stores,
remodels and relocations.

     Net interest expense in fiscal 2002 was $14.3 million or 3.8% of net sales,
as compared to $14.0 million or 4.0% of net sales for fiscal 2001. Both fiscal
2002 and fiscal 2001 reflect interest on our senior notes and the amortization
of the $7.3 million original issue discount on our senior notes, the $470,000
value assigned to the warrants issued by Holdings and deferred financing costs,
capital lease interest and interest expense on our short-term borrowings.


                                       15





<PAGE>

     The income tax benefit for fiscal 2002 was $1.3 million or a 42.5% income
tax benefit rate as compared to income tax benefit of $808,000, or an income tax
benefit rate of 38.3% for fiscal 2000. The higher income tax benefit rate in
fiscal 2002 was due to additional tax credits received in fiscal 2002.

     There was a net loss of $1.8 million in fiscal 2002 as compared to a net
loss of $1.3 million in fiscal 2001. The difference was caused by the factors
discussed above.

Liquidity and Capital Resources

     Our primary sources of liquidity are cash flow from operating activities
and borrowings under our revolving credit facility. Our primary cash
requirements are for (i) seasonal working capital, (ii) the construction of new
stores, (iii) the remodeling or upgrading of existing stores, (iv) upgrading and
maintaining computer systems and (v) interest on our senior notes.

     On May 2, 2001, the Company entered into a Loan and Security agreement (the
"Facility"). The Facility expires in May 2004 and provides for a revolving
credit facility, subject to eligible inventory and credit card receivables, not
to exceed $30.0 million, of which $10.0 million can be used for letters of
credit. We may use the revolving credit facility for general operating, working
capital and other proper corporate purposes. The Facility provides for seasonal
fluctuations in inventory with peak borrowing availability during the months of
July through November. Interest on outstanding borrowings can range either from
Prime to Prime plus 0.25% or from 1.50% over the Eurodollar Rate to a maximum
2.25% over the Eurodollar rate, based on the profitability and amount of
indebtedness of the Company. The Facility subjects us to a minimum net worth, as
defined, covenant of $40.0 million if the excess availability under the Facility
is $7.5 million or less during any month. The Facility also contains other
customary restrictive covenants including limitations on changes of ownership,
transactions with affiliates, dividends, additional indebtedness, creation of
liens, asset sales, acquisitions, conduct of business and capital expenditures.
Our obligations under the Facility are secured by a lien on all or substantially
all of our assets, excluding our leasehold interests. As of February 1, 2003, we
had no borrowings outstanding under the Facility, but had approximately $432,500
of letters of credit outstanding.

     Net cash provided by operating activities in fiscal 2003 was $20.4 million,
as compared to $13.7 million in fiscal 2002, an increase of $6.7 million. The
increase in net cash provided by operating activities in fiscal 2003, as
compared to fiscal 2002, was principally due to the $6.1 million increase in our
accounts payable and accrued expense balances in fiscal 2003 as compared to
fiscal 2002. This increase was the result of the new store growth and its effect
on salaries, rent and occupancy costs, including the recognition of an
additional $1.0 million of rental escalations accounted for on a straight-line
basis, and the timing of merchandise receipts and vendor payments.

     Capital expenditures for fiscal 2003, 2002 and 2001 were $12.6 million,
$11.5 million, and $26.3 million, respectively. The increase in capital
expenditures for fiscal 2003 was due to our opening of more stores coupled with
an increase in the number of stores remodeled. For fiscal 2004, management
estimates that capital expenditures will be between $13.0 million and $14.0
million.

     We have an agreement from a lending institution for $6.5 million of capital
lease financing for the purchase of point of sale equipment and software. The
lease provides for monthly payments that depend on the amount of equipment
leased. The lease terms include variable interest rates based on the purchase
date, and leases expire five years from the date of the initial equipment
financed. In fiscal 2003 we did not enter into any additional capital lease
financing. Total lease financed under this agreement was $6.4 million as of
February 1, 2003. The capital lease obligation outstanding as of February 1,
2003 was $2.7 million.

     We continually monitor the operating performance of our stores on an
ongoing basis to determine which stores, if any, to expand or close. We closed
17 stores in fiscal 2003, 18 stores in fiscal 2002 and 19 stores in fiscal 2001.


                                       16





<PAGE>

     As of February 1, 2003, we had $21.5 million in cash. We historically have
maintained negligible accounts receivable balances since our customers primarily
pay for their purchases with cash, checks and third-party credit cards, which
are promptly converted to cash.

     On May 17, 1999, we and Holdings completed a private placement of an
aggregate of $107.0 million face amount of outstanding notes issued by us and
warrants issued by Holdings to purchase 8,209 shares of nonvoting Class D Common
Stock at an exercise price of $.01 per share. The net proceeds from this private
placement were $93.9 million, after deducting the original issue discount of
$7.3 million and fees of $5.8 million. We used the net proceeds to repay senior
bridge notes and for general corporate purposes. On November 2, 1999, our
privately placed notes were exchanged for notes that are freely tradable. As of
February 1, 2003, our indebtedness under our senior notes totaled $102.6
million, which reflects the aggregate face amount of the senior notes of $107.0
million, net of $4.2 of unamortized original issue discount, and approximately
$221,000 of unamortized value assigned to the warrants issued by Holdings. The
interest on the senior notes is 11% per annum, payable semi-annually on May 15th
and November 15th.

     Our commitments to make future payments under long-term contractual
obligations was as follows, as of February 1, 2003:

<TABLE>
<CAPTION>
                                                       Payments Due by Period
                                                       (dollars in thousands)
                                     --------------------------------------------------------------
                                                Less than                                 More than
      Contractual Obligations          Total    one year    1 to 3 years   3 to 5 years    5 years
----------------------------------   --------   ---------   ------------   ------------   ---------
<S>                                  <C>         <C>          <C>             <C>          <C>
Operating Leases                     $160,182    $31,356      $ 52,897        $34,694      $41,235
Capital Lease Obligations               2,902      1,941           961             --           --
Long Term Debt                        107,000         --       107,000             --           --
                                     --------    -------      --------        -------      -------

Total Contractual Cash Obligations   $270,084    $33,297      $160,858        $34,694      $41,235
                                     ========    =======      ========        =======      =======
</TABLE>

     We believe that our cash flow from operating activities, cash on hand and
borrowings available under the revolving credit facility will be sufficient to
meet our operating and capital expenditure requirements through the end of
fiscal 2004. In addition, we believe that cash flow from operations will be
sufficient to cover the interest expense arising from the revolving credit
facility, our capitalized leases and our long-term debt. However, the
sufficiency of our cash flow is affected by numerous factors affecting our
operations, including factors beyond our control. See "Item 1. Business - Risk
Factors".

     If a "change of control" (as defined in the indenture agreement for our
senior notes) occurs, we will be required under the indenture to offer to
repurchase all our notes. However, we may not have sufficient funds at the time
of the change of control to make the required repurchases, or restrictions in
our revolving credit facility may prohibit the repurchases. We may not be able
to raise enough money to finance the change of control offer required by the
indenture related to the senior notes. If there is a change in control, we could
be in default under the indenture. In addition, upon a change of control, our
parent company may not have sufficient funds to redeem its preferred stock as
required in such event unless we pay a dividend of such amount to it.

Seasonality and Quarterly Operating Results

     Our fiscal fourth quarter historically accounts for the largest percentage
of our annual net sales. Our fiscal first quarter historically accounts for the
smallest percentage of annual net sales. In fiscal 2003,


                                       17





<PAGE>

our fourth quarter accounted for approximately 29.2% of annual net sales, as
compared to 30.4% in fiscal 2002.

     Our quarterly results of operations may also fluctuate significantly as a
result of a variety of factors, including the timing of store openings, the
amount of revenue contributed by new stores, changes in the mix of products
sold, the timing and level of markdowns, the timing of store closings and
expansions, competitive factors and general economic conditions.

Inflation

     We do not believe that inflation has had a material effect on the results
of operations during the past three fiscal years. However, our business may be
affected by inflation in the future.

Critical Accounting Policies and Estimates

     Management's Discussion and Analysis of Financial Position and Results of
Operations are based upon the Company's consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States. The preparation of these financial statements requires
management to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses and related disclosure of contingent
assets and liabilities. We believe the application of our accounting policies,
and the estimates inherently required therein, are reasonable. Our accounting
policies and estimates are reevaluated on an ongoing basis, and adjustments are
made when facts and circumstances dictate a change is warranted. Our accounting
policies are more fully described in Note 1 to the Consolidated Financial
statements included herein.

     Management believes the critical accounting policies and areas that require
the most significant judgments and estimates to be used in the preparation of
the consolidated financial statements are inventory valuation, valuation of
goodwill and other indefinite lived intangible assets, vendor allowances and
income tax accounting.

Inventory Valuation

     Merchandise inventories, which consist of finished goods, are valued at the
lower of cost as determined by the retail inventory method (average cost basis)
or market value. Inventories include items that have been marked down to
management's best estimate of their fair market value. Markdowns are taken
regularly to affect the rapid sale of slow moving inventory and to allow for
daily delivery of new merchandise to the stores. To the extent that management's
estimates differ from actual results, additional markdowns may be required which
could decrease our gross margin and operating income. Our success is largely
dependent on our ability to anticipate the changing fashion tastes of our
customers and to respond to those changing tastes in a timely manner. If we fail
to anticipate, identify or react appropriately to changing styles, trends or
brand preferences of our customers, we may experience lower sales, excess
inventories and more frequent markdowns, which would adversely affect our
operating results.

Valuation of Goodwill and Other Indefinite Lived Intangible Assets

     We adopted Statement of Accounting Standards ("SFAS") No. 142, Goodwill and
Other Intangible Assets, effective February 3, 2002, (the first day of fiscal
2003). Under SFAS 142, goodwill, trademarks and other intangible assets that
have indefinite useful lives are no longer amortized, but are subject to at
least an annual assessment of impairment by applying a fair value based test, as
specifically provided in the Statement. We completed the required initial
impairment test on goodwill as of the first day of fiscal 2003 along with the
annual impairment test on its reported goodwill and the indefinite lived
intangible assets (trademarks) in the fourth quarter of fiscal 2003. In both
instances, it was determined that there was no impairment to its recorded
goodwill or indefinite lived intangible assets.


                                       18





<PAGE>

Vendor Allowances

     Vendor allowances are recognized when the Company receives an executed
allowance agreement from its vendors and are recorded as a reduction of cost of
sales in the period in which the allowance agreement is executed. These
allowances primarily benefit our fourth quarter in each year. Allowances
recognized in the first three quarters of our fiscal year are markdown
allowances received from vendors for specific poor-performing styles of
merchandise and have historically aggregated less than 20% of total vendor
allowances received in a fiscal year. Year-end allowances, which represent the
balance of vendor allowances, are negotiated and recorded in the fourth quarter
based on vendor profitability and volume for the calendar year. Vendor
allowances for fiscal 2003 were $5.0 million, as compared to $5.3 million in
fiscal 2002.

Income Taxes

     The Company accounts for income taxes in accordance with SFAS No. 109,
Accounting for Income Taxes (FAS 109), which requires that deferred tax assets
and liabilities be recognized using enacted tax rates for the effect of
temporary differences between the book and tax bases of recorded assets and
liabilities FAS 109 also requires that deferred tax assets be reduced by a
valuation allowance if it is more likely than not that some portion or all of
the deferred tax asset will not be realized.

     The Company evaluates quarterly the realizability of its deferred tax
assets by assessing its valuation allowance and by adjusting the amount of such
allowance, if necessary. The factors used to assess the likelihood of
realization are the Company's forecast of future taxable income and available
tax planning strategies that could be implemented to realize the net deferred
tax assets. The Company has used tax-planning strategies to realize or renew net
deferred tax assets in order to avoid the potential loss of future tax benefits.

Recently Issued Accounting Pronouncements

     In April 2002, the FASB issued SFAS No.145, Rescission of FASB Statements
No. 4, 44 and 62, Amendment of FASB Statement No. 13, and Technical Corrections
("SFAS 145"). SFAS 145 eliminates the requirement under SFAS No. 4, Reporting
Gains and Losses from Extinguishments of Debt, to report gains and losses from
extinguishments of debt as extraordinary items in the income statement.
Accordingly, gains or losses from extinguishments of debt for fiscal years
beginning after May 15, 2002 shall not be reported as extraordinary item under
the provisions of APB Opinion No. 30, Reporting the Results of Operations -
Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently Occurring Events and Transactions. Upon adoption of
this pronouncement, any gain or loss on extinguishments of debt previously
classified as an extraordinary item in prior periods presented that does not
meet the criteria of Opinion 30 for such classification should be reclassified
to conform with the provisions of SFAS 145. Management does not believe the
adoption of this standard will have a material impact on the consolidated
financial statements.

     In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities ("SFAS 146") and nullifies EITF Issue No. 94-3,
Liability Recognition for Certain Employees Termination Benefits and Other Costs
to Exit an Activity (including Certain Costs Incurred in a Restructuring). SFAS
146 requires that a liability for a cost associated with an exit or disposal
activity be recognized when the liability is incurred, whereas EITF No. 94-3 had
recognized the liability at the commitment date to an exit plan. The Company is
required to adopt the provisions of SFAS 146 effective for exit or disposal
activities initiated after December 31, 2002. Management does not believe the
adoption of this standard will have a material impact on the consolidated
financial statements.


                                       19





<PAGE>

Item 7A. Quantitative and Qualitative Disclosure About Market Risk.

     Not applicable.

Item 8. Financial Statements and Supplementary Data.

     Our Consolidated Financial Statements are included in this report
immediately following Part IV.

Item 9. Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure.

     Not applicable.


                                       20





<PAGE>

                                    PART III

Item 10. Directors and Executive Officers of the Registrant

     Our directors and executive officers are:

<TABLE>
<CAPTION>
Name                Age   Position(s)
----                ---   -----------
<S>                  <C>  <C>
Jay Galin            67   Chairman of the Board of Directors and Chief Executive Officer
Scott Galin          44   President, Chief Operating Officer and Director
Craig Cogut          49   Director
Donald D. Shack      74   Director
Lenard B. Tessler    50   Director
Michael Kaplan       49   Senior Vice President, Chief Financial Officer, Treasurer and Secretary
James R. Dodd        61   Senior Vice President Store Operations
Jeffrey Galin        41   Senior Vice President/Merchandise Manager
</TABLE>

Biographical Information

     Jay Galin worked for G&G Shops for over 40 years and served as President of
G&G Shops from 1972 to August 1998. He became our Chairman of the Board and
Chief Executive Officer in August 1998. Mr. Galin also served as Senior Vice
President of Petrie Retail from 1981 to 1990 and Executive Vice President of
Petrie Retail from 1990 to 1995. Mr. Galin served as a board member of Petrie
Stores, Petrie Retail's predecessor, from 1980 to 1995 and is a member of the
Board of Directors of Ark Restaurants Corp. Mr. Galin is the father of Scott
Galin and Jeffrey Galin.

     Scott Galin worked for G&G Shops for over 20 years and served as Executive
Vice President and Chief Operating Officer of G&G Shops from 1992 to August
1998. He became our President, Chief Operating Officer and a director in August
1998. From 1985 to 1992, Mr. Galin served as a Senior Vice President of G&G
Shops and held executive positions in real estate, finance and store operations.
Mr. Galin also served as Senior Vice President of Petrie Retail from 1985 to
1995. Scott Galin is the son of Jay Galin and the brother of Jeffrey Galin.

     Craig Cogut is a senior founding principal of Pegasus Capital Advisors,
L.P., which, wit hits affiliates, manages approximately $800 million in equity
capital. Pegasus' first investment partnership was formed in August 1996. He
joined our Board of Directors in August 1998 and was our President from July
1998 to August 1998. From 1990 to 1995, Mr. Cogut was a senior principal of
Apollo Advisors, L.P. and Lion Advisors, L.P., partnerships that managed several
billion dollars of equity capital for investment partnerships and private
accounts.

     Donald D. Shack is a founding member of the law firm of Shack Siegel Katz &
Flaherty P.C., general counsel to G+G Retail and Holdings. He joined our Board
of Directors in August 1998. Before the formation of Shack Siegel Katz &
Flaherty P.C. in April 1993, Mr. Shack was a member of the law firm of Whitman &
Ransom from 1990 to 1993 and a member of the law firm of Golenbock & Barell from
1959 to 1989.

     Lenard B. Tessler is a Managing Director of Cerberus Capital Management,
L.P., an investment management firm, which he joined in May 2001. Prior to
joining Cerberus Capital Management, L.P., he was a founding partner of TGV
Partners, a private investment partnership formed in April 1990. He joined our
Board of Directors in August 1998. Mr. Tessler served as Chairman of the Board
of Empire Kosher Poultry from 1994 to 1997, after serving as its President and
Chief Executive Officer from 1992 to 1994.


                                       21





<PAGE>

Before founding TGV Partners, Mr. Tessler was a founding partner of Levine,
Tessler, Leichtman & Co., a leveraged buyout firm formed in 1987. Mr. Tessler
serves as a member of the Board of Directors of Garfield & Marks Designs, Ltd.,
Inc., Opinion Research Corporation, Inc., Meridian Rail LLC, Renaissance Mark
Holdings Corp. and Anchor Glass Container Corp.

     Michael Kaplan served as Vice President and Chief Financial Officer of G&G
Shops from 1988 to August 1998. He became our Vice President, Chief Financial
Officer, Treasurer and Secretary in August 1998 and Senior Vice President in
October 1999. Mr. Kaplan is a certified public accountant and from 1976 to 1980
held various auditing positions with Ernst & Young LLP.

     James R. Dodd has worked in the apparel industry for over 30 years. He
served as Vice President of Store Operations of G&G Shops from April 1998 to
August 1998. He became our Vice President Store Operations in August 1998 and
Sr. Vice President Store Operations in October 1999. From July 1995 to May 1998,
he was Vice President-Retail Division for JH Collectibles in Milwaukee,
Wisconsin. From 1994 to May 1995, Mr. Dodd was Vice President of Operations for
Tommy Hilfiger.

     Jeffrey Galin served as divisional merchandise manager of G&G Shops from
1991 to August 1998. He became our Vice President Merchandising in August 1998
and Senior Vice President/Merchandise Manager in October 1999. From 1989 to
1991, Mr. Galin was employed as a sales associate for Bergdorf Goodman. From
1985 to 1988, Mr. Galin worked as a commercial real estate salesperson. Mr.
Galin started his career as an associate buyer for G&G Shops from 1983 to 1984.
Jeffrey Galin is the son of Jay Galin and the brother of Scott Galin.

     Our executive officers were elected to serve in their capacities until the
next annual meeting of our Board of Directors and until their respective
successors are elected and qualified. We employ Jay Galin and Scott Galin under
employment agreements. See "Item 11. Executive Compensation-Employment Contracts
and Severance Agreements."

     All of our executive officers were also executive officers of G&G Shops
prior to the acquisition. In addition, Jay and Scott Galin were executive
officers of Petrie Retail. In October 1995, Petrie Retail and its affiliates,
including G&G Shops, filed a voluntary petition for relief under Chapter 11 of
the U.S. Bankruptcy Code. In August 1998, we purchased the assets of G&G Shops
from these companies.

Board of Directors

     Under the certificate of incorporation of Holdings, so long as Holdings
controls us, Holdings is required to cause our Board of Directors to be
identical to its Board of Directors. The Board of Directors of Holdings and, as
a result, our Board of Directors each consists of five members. All of our
directors hold office until the next annual meeting of stockholders and until
their successors are duly elected and qualified. Holders of class A common stock
of Holdings are currently entitled to elect three directors, and holders of
class B common stock of Holdings are currently entitled to elect two directors.
The holders of class A common stock of Holdings elected Messrs. Jay and Scott
Galin and Mr. Shack to the Board of Directors of Holdings. The holders of class
B common stock elected Mr. Cogut and Mr. Tessler to the Board of Directors of
Holdings. As of April 30, 2003, Jay and Scott Galin collectively owned, assuming
the exercise of their vested stock options, approximately 85.1% of the
outstanding class A common stock of Holdings. Affiliates of Pegasus Investors
owned 100% of the class B common stock of Holdings. See "Item 12. Security
Ownership of Certain Beneficial Owners and Management." See "Item 13. Certain
Relationships and Related Transactions" for descriptions of agreements relating
to the stock ownership and management of our business.

     Holders of class A common stock of Holdings will be entitled to elect two
of our directors, and holders of class B common stock of Holdings will be
entitled to elect three of our directors, upon the occurrence of any of the
following events:


                                       22





<PAGE>

     o    the consolidated earnings of Holdings before interest, taxes,
          depreciation and amortization for the most recent 12 full months being
          less than $15.0 million;

     o    the occurrence of uncured defaults (as defined), under any debt
          facilities of G+G Retail or Holdings;

     o    termination of the employment of either of Jay Galin or Scott Galin by
          us for cause or by either of them without good reason or the
          termination of both Jay Galin and Scott Galin after August 27, 2003 by
          us without cause or by them with good reason, as these terms are
          defined in each executive's employment agreement; or

     o    certain events set forth in Holding's certificate of incorporation
          including the failure of Holdings to perform specified obligations to
          the holders of its series B preferred stock and the failure of one of
          the three directors elected by Holdings' class A common stock to vote
          in favor of certain corporate transactions supported by the directors
          elected by Holdings' class B common stock.

     From and after the time that there are no longer any shares of the class B,
class C or class D common stock of Holdings outstanding, the Board of Directors
of Holdings will be elected at each annual meeting of stockholders by a
plurality of the votes cast by holders of the class A common stock of Holdings.

     Under an agreement dated August 28, 1998 among Pegasus Investors, L.P., G+G
Retail, Pegasus Partners, L.P. and Pegasus Related Partners, L.P., the Pegasus
entities agreed that they will elect Lenard Tessler as a director of G+G Retail
and Holdings, for as long as:

     o    TGV/G+G Investors LLC, an affiliate of TGV Partners of which Lenard
          Tessler is a principal, is a limited partner of Pegasus G&G Retail;
          and

     o    the Pegasus entities have the power to elect at least two directors to
          the Board of Directors of Holdings.

     In the event that Lenard Tessler votes, or after inquiry indicates his
intention to vote, on any issue brought before the Board of Directors of
Holdings differently than the other director elected by the Pegasus entities,
then the obligation of the Pegasus entities to elect Lenard Tessler to the Board
of Directors of Holdings will terminate, Mr. Tessler will immediately resign
from our Board of Directors and from the Board of Directors of Holdings, and the
Pegasus entities will be entitled to elect a new director to replace Mr.
Tessler. In this event, the Pegasus entities will appoint Mr. Tessler or another
individual acceptable to the Pegasus entities as an observer at meetings of the
Board of Directors of Holdings until the time that their obligation to elect Mr.
Tessler as a director would otherwise have terminated.

Item 11. Executive Compensation

     The table below contains information on the fiscal 2001, 2002 and 2003
compensation for services to us by the individuals who served as our chief
executive officer and our four next most highly compensated executive officers
at the end of fiscal 2003.


                                       23





<PAGE>

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                                       Annual Compensation
                                                   ----------------------------
                                                                                     All Other
Name and Principal Position                        Year     Salary       Bonus    Compensation(1)
-----------------------------------------------    ----   ----------   --------   ---------------
<S>                                                <C>    <C>          <C>            <C>
Jay Galin                                          2003   $1,135,417   $113,541       $55,976
   Chairman of the Board of Directors and Chief    2002    1,110,417         --        59,400
   Executive Officer                               2001    1,085,417     65,125        25,800

Scott Galin                                        2003   $  885,417   $ 88,541       $31,604
   President, Chief Operating Officer and          2002      860,417         --        31,700
   Director                                        2001      835,417     38,125        25,800

Michael Kaplan                                     2003   $  348,666   $ 34,866       $15,564
   Sr. Vice President, Chief Financial Officer,    2002      299,432         --        18,900
   Treasurer and Secretary                         2001      281,004     17,529        20,600

Jeffrey Galin                                      2003   $  293,388   $ 29,338       $12,098
   Sr. Vice President                              2002      240,692         --        15,400
   Merchandise Manager                             2001      220,385     13,749        17,100

James Dodd                                         2003   $  236,442   $ 23,644       $13,950
   Sr. Vice President                              2002      224,904         --        18,900
   Store Operations                                2001      211,442     13,200        20,600
</TABLE>

----------
(1)  The figures in the column "All Other Compensation" include medical
     reimbursement and premiums paid under our executive medical reimbursement
     plan. These medical costs for the following officers in 2003, 2002 and
     2001, respectively, were: Jay Galin $45,656, $45,800 and $10,500; Scott
     Galin $21,284, $18,100 and $10,500; Mr. Kaplan $5,244, $5,300 and $5,300;
     Jeffrey Galin $1,778, $1,800, and $1,800; and Mr. Dodd $3,630, $5,300, and
     $5,300. Also included in "All Other Compensation" are contributions to the
     G+G Retirement Plan and Trust made for the benefit of the following
     officers in 2003, 2002 and 2001 respectively, as follows: Jay Galin
     $10,320, $13,600 and, $15,300; Scott Galin $10,320, $13,600 and $15,300;
     Mr. Kaplan $10,320, $13,600 and $15,300; Jeffrey Galin $10,320, $13,600 and
     $15,300; and Mr. Dodd $10,320, $13,600 and $15,300.

     The following table sets forth information about the exercise of options to
purchase the class A common stock of Holdings and the number and value of
outstanding options owned by persons named in the Summary Compensation Table.

                 Aggregate Option Exercises in Last Fiscal Year
                        and Fiscal-Year-End Option Values

<TABLE>
<CAPTION>
                                                        Shares Underlying     Value of Unexercised
                                                     Unexercised Options at   In-the-Money Options
                                                          02/01/03 (#)           at 02/01/03 ($)
                 Shares Acquired on      Value            Exercisable/             Exercisable/
Name                Exercise (#)      Realized ($)       Unexercisable            Unexercisable
--------------   ------------------   ------------   ----------------------   --------------------
<S>                      <C>               <C>            <C>                        <C>
Jay Galin                0                 0              2,500 / 0                  0 / 0
Scott Galin              0                 0              2,500 / 0                  0 / 0
Michael Kaplan           0                 0                200 / 0                  0 / 0
Jeffrey Galin            0                 0                150 / 0                  0 / 0
James Dodd               0                 0                150 / 0                  0 / 0
</TABLE>


                                       24





<PAGE>

Stock Option Plan of Holdings

     Effective as of March 15, 1999, Holdings adopted a stock option plan
providing for the granting of options to purchase up to 7,000 shares of its
class A common stock to its employees and employees of its subsidiaries. This
option plan is administered by the Board of Directors of Holdings, which is
authorized under the plan to grant incentive stock options and non-qualified
stock options.

     Effective as of March 15, 1999, Holdings granted non-qualified options
under the plan to each of Jay Galin and Scott Galin to purchase 2,500 shares of
its class A common stock, all of which are currently exercisable. Effective as
of October 19, 1999, Holdings granted an aggregate of 2,000 non-qualified
options under its option plan to various employees, of which 1,925 are currently
exercisable. The exercise price of each of the options is $300 per share, and
each option has a term of 10 years. The exercise price of the options exceeded
the fair market value of Holdings stock on the date of grant and the stock
options are non-transferable other than by a will or the laws of descent and
distribution, unless the Board of Directors of Holdings permits transfer and the
transfer is described in the option instrument.

     This option plan automatically terminates on March 14, 2009, unless the
Board of Directors of Holdings terminates it earlier. Termination of the option
plan will not terminate any option that was granted before termination.

                      Equity Compensation Plan Information

<TABLE>
<CAPTION>
                                                                                              Number of securities
                                                                                             remaining available for
                                                                                              future issuance under
                                            Number of securities        Weighted-average       equity compensation
                                         to be issued upon exercise     exercise price of       plans (excluding
                                           of outstanding options,    outstanding options,    securities reflected
             Plan category                   warrants and rights       warrants and rights        in column (a))
--------------------------------------   --------------------------   --------------------   -----------------------
                                                     (a)                       (b)                    (c)
<S>                                                 <C>                       <C>                      <C>
Equity compensation plans approved by
   security holders...................              6,925                     $300                     75
Equity compensation plans not approved
   by security holders................                  0                        0                      0
                                                    -----                     ----                    ---
      Total...........................              6,925                     $300                     75
</TABLE>

Employment Contracts and Severance Agreements

     We employ Jay Galin as the Chairman of our Board and our Chief Executive
Officer under an employment agreement that expires on August 27, 2007. Under his
employment agreement, Jay Galin is currently receiving a base salary of
$1,150,000 per year, which increases by $25,000 annually. Jay Galin is also
entitled to receive a bonus under our bonus plan for senior management
employees. See "- Our Bonus Plan" below. At any time during the term of his
employment agreement, Jay Galin may, upon three months' prior written notice to
us, terminate his employment agreement and enter into a consulting agreement
with us that would expire on August 27, 2007. The consulting agreement would
require Jay Galin to provide consulting services to us for up to half normal
working time, in exchange for annual consulting fees equal to one-half of his
annual salary at the time of termination of his employment agreement. If Jay
Galin terminates his employment or engagement by us for good reason or we
terminate his employment or engagement without cause (as defined), (i) he can
elect to receive either a lump sum


                                       25





<PAGE>

payment of $2,750,000 or $3,850,000 paid in 30 equal monthly installments, if
such termination occurs during the term of the employment agreement or within
180 days after the commencement of the consulting agreement or (ii) he can elect
to receive either a lump sum payment of $1,375,000 or $1,925,000 paid in 30
equal monthly installments, if such termination occurs following 180 days after
the commencement of the consulting agreement. If within one year following a
change of control (as defined), Jay Galin terminates his employment or
engagement by us or if we terminate Jay Galin's employment or engagement by us
without cause, (i) he can elect to receive either a lump sum payment of
$3,025,000 or $3,575,000 paid in 30 equal monthly installments, if such
termination occurs during the term of the employment agreement or within 180
days after the commencement of the consulting agreement or (ii) he can elect to
receive either a lump sum payment of $1,512,500 or $1,787,500 paid in 30 equal
monthly installments, if such termination occurs following 180 days after the
commencement of the consulting agreement. For 10 years following the end of Jay
Galin's employment or engagement by us, we will maintain medical and dental
benefits which cover medical and dental expenses incurred by Jay Galin, his
spouse and his dependents, limited to an aggregate of $100,000 per year over
amounts covered by our insurance. If Jay Galin shall become disabled (as
defined) during the term of his employment agreement or consulting agreement, he
will receive his full salary, or his consulting fee, as the case may be, and
full benefits for one year and 50% of his salary or 50% of his consulting fee,
as the case may be, and full benefits for an additional six months. If Jay Galin
dies during the term of his employment agreement or consulting agreement, we are
required to pay his designated beneficiary his salary and bonus or his
consulting fee, as the case may be, for one year following his death

     We employ Scott Galin as our President and Chief Operating Officer under an
employment agreement that expires on August 27, 2007. Under his employment
agreement, Scott Galin is currently receiving a base salary of $900,000 per
year, which increases by $25,000 annually. Scott Galin is also entitled to
receive a bonus under our bonus plan for senior management employees. See "-Our
Bonus Plan." In the event that Jay Galin's employment is terminated for any
reason, Scott Galin will serve as our chief executive officer for the remaining
term of his employment agreement. If Scott Galin terminates his employment by us
for good reason (as defined) or we terminate his employment without cause (as
defined), he can elect to receive either a lump sum payment of $2,250,000 or
$3,150,000 paid in 30 equal monthly installments. If within one year following a
change of control (as defined), Scott Galin terminates his employment by us or
if we terminate Scott Galin's employment by us without cause, he can elect to
receive either a lump sum payment of $2,475,000 or $2,925,000 paid in 30 equal
monthly installments. If Scott Galin shall become disabled (as defined) during
the term of his employment agreement, he will receive his full salary and full
benefits for one year and 50% of his salary and full benefits, as the case may
be, for an additional six months. If Scott Galin dies during the term of his
employment agreement, we are required to pay his designated beneficiary his
salary and bonus for one year following his death.

     Each of Jay Galin's and Scott Galin's employment agreements contain
covenants precluding him from, among other things, competing with us or
soliciting our customers or employees until the earlier of the expiration of the
term of the employment agreement or the date that is 18 months after the
termination of his employment with us. If Jay Galin exercises his consulting
option, his consulting agreement will contain similar covenants not to compete
or solicit.

     We have also entered into separate agreements with Michael Kaplan, our
Senior Vice President and Chief Financial Officer, Treasurer and Secretary and
Jeffrey Galin, our Senior Vice President/Merchandise Manager, that provide for
severance payments in the event that we terminate their employment without
cause, as that term is defined in the severance agreements. These severance
payments consist of the executive's base salary for one year and, if the
executive elects to continue coverage under our medical insurance, the payment
of a portion of the premiums for such insurance equal to the portion which would
have been paid had he remained in our employ for up to one year.


                                       26





<PAGE>

Our Bonus Plan

     Our Board of Directors adopted a bonus plan for senior management employees
that became effective on February 2, 1999. Participants in the bonus plan
include Jay Galin, Scott Galin and other selected members of our senior
management. Under the bonus plan, participants are eligible to receive annual
cash bonuses in addition to their base salaries.

     The payment of bonus awards for each fiscal year is based upon our
financial performance for the fiscal year measured by our earnings before
interest, taxes, depreciation and amortization for that fiscal year. The bonus
plan provides for several performance levels, each based on:

     o    a percentage of our projected earnings before interest, taxes,
          depreciation and amortization for the relevant fiscal year established
          by our Board of Directors; and

     o    the dollar amount of bonuses payable to participants in the bonus plan
          for the relevant fiscal year at the performance level.

     The dollar amount of bonus awards is based on a percentage of each
participant's base salary based on the performance level that we achieve. Our
Board of Directors administers the bonus plan. The bonus plan may be amended or
terminated at any time upon the recommendation of the Chairman of our Board and
Chief Executive Officer and our President and Chief Operating Officer.

Compensation of Our Directors

     As of the date of this report, our directors do not receive any
compensation for their services as directors.

Compensation Committee Interlocks and Insider Participation

     Our Board of Directors does not have a compensation committee. Executive
officer compensation is determined by the full Board of Directors, which
includes Jay Galin our Chairman, and Chief Executive Officer and Scott Galin,
our President and Chief Operating Officer. No officer, director or other person
had any relationship required to be disclosed under this heading.

Item 12. Security Ownership of Certain Beneficial Owners and Management

     Holdings own all of our outstanding capital stock. Holdings has four
authorized classes of common stock: class A, class B, class C and class D.
Holdings and we are prohibited from taking certain actions without the
affirmative vote or written consent of holders of a majority of the issued and
outstanding shares of class B common stock. Restricted actions include, among
others:

     o    issuance or redemption of securities;

     o    incurrence of indebtedness in excess of specified amounts;

     o    effecting a liquidation or sale of the business of G+G Retail or
          Holdings; or

     o    initiating a public offering, subject to limited exceptions.

     Except as required by the Delaware General Corporation Law, holders of
class C and class D common stock do not have any voting rights. After the
completion of a public offering, if at least 20% of the common stock of Holdings
is listed or admitted for trading on a national securities exchange or quoted on
the Nasdaq National Market, each share of class B, class C and class D common
stock then issued and outstanding will automatically convert into one share of
class A common stock.


                                       27





<PAGE>

     Holdings has two series of preferred stock outstanding. Holders of series A
preferred stock are entitled to receive dividends, when and as declared by
Holding's Board of Directors, at an annual rate of 15%. Any dividend payment
made on or prior to August 28, 2003 may be made, at the discretion of the
Holdings Board of Directors, in cash, in additional shares of series A preferred
stock or by accretion. Any dividend payment made after August 28, 2003 must be
made in cash. The dividend rate increases to 17% upon the occurrence of a series
A triggering event in the certificate of incorporation of Holdings. One such
triggering event is the failure by Holdings to pay dividends on the series A
preferred stock for any reason. Holdings' only source of funds to pay the series
A preferred stock dividend in cash would be a dividend paid by us to Holdings
which our senior note indenture covenants currently prevent us from making.
Holdings is prohibited from taking specified actions without the affirmative
vote or written consent of a majority of the holders of series A preferred
stock. Otherwise, except as required by the Delaware General Corporation Law,
holders of series A preferred stock do not have any voting rights. Series A
preferred stock is exchangeable at the option of Holdings for notes containing
similar terms.

     Holders of series B preferred stock are entitled to receive dividends when
and as declared by the Board of Directors at an annual rate of 17%. Any dividend
payment may be made, at the discretion of the Holdings Board of Directors, in
cash, in additional shares of series B preferred stock or by accretion but if a
dividend is paid in cash to the holders of series A preferred stock, an equal
amount must be paid in cash as a dividend to the holders of the series B
preferred stock. Except as required by the Delaware General Corporation Law,
holders of series B preferred stock do not have any voting rights. The shares of
series B preferred stock are exchangeable at the option of Holdings for notes
containing similar terms.

     The following table contains information about the beneficial ownership of
Holdings capital stock as of April 30, 2003, including ownership by:

     o    each person known to us to beneficially own more than 5% of the
          outstanding voting securities of Holdings;

     o    each of our directors;

     o    each of our five most highly compensated executive officers; and

     o    all of our directors and executive officers as a group.


                                       28





<PAGE>

<TABLE>
<CAPTION>
                                                Percentage     Percent of    Number of    Percentage   Number of    Percentage
                                   Number of     Ownership     Vote of all   Shares of    Ownership    Shares of    Ownership
                                   Shares of      of all       Classes of     Series A   of Series A    Series B   of Series B
                                     Common     Classes of       Voting      Preferred    Preferred    Preferred    Preferred
Name of Beneficial Owner             Stock     Common Stock   Common Stock     Stock        Stock        Stock        Stock
--------------------------------   ---------   ------------   ------------   ---------   -----------   ---------   -----------
<S>                                <C>             <C>            <C>          <C>           <C>        <C>           <C>
Pegasus Related Partners, L.P.      26,723(1)      39.5%          25.4%            --         --        29,177        49.4%
Paul Gunther, as Liquidating
   Trustee under Liquidating
   Trust Agreement dated as of
   December 18, 1998                15,000(2)      30.1%            --             --         --            --          --
Cerberus G&G Company, L.L.C.        14,000(3)      21.9%            --         33,996        100%           --          --
Pegasus G&G Retail, L.P.            11,924(4)      20.6%          11.5%            --         --        13,197        22.3%
Pegasus Partners, L.P.              10,276(5)      18.1%           9.8%            --         --        11,217        19.0%
Jay Galin                            9,340(6)      17.8%          25.0%            --         --            --          --
Scott Galin                          9,340(6)      17.8%          25.0%            --         --            --          --
Pegasus G&G Retail II, L.P.          4,977(7)       9.4%           4.8%            --         --         5,510         9.3%
Donald D. Shack                         20(8)         *              *             --         --            --          --
Craig Cogut                         53,900(9)      62.8%          51.4%            --         --        59,101(9)      100%
Lenard Tessler                          --           --             --             --         --            --          --
Michael Kaplan                        875(10)       1.7%           2.5%            --         --            --          --
Jeffrey Galin                       1,570(11)       3.1%           4.5%            --         --            --          --
James R. Dodd                         300(12)         *              *             --         --            --          --
All directors and executives
   officers as a group
   (8 individuals)                 75,345(13)      65.5%          94.2%            --         --        59,101         100%
</TABLE>

----------
*    Less than 1%.

(1)  Includes 8,837 class B shares, representing 49.4% of the outstanding class
     B shares and warrants to purchase 17,886 class D shares. The address of
     this stockholder is 99 River Road, Cos Cob, Connecticut 06807.

(2)  100% of the outstanding class C shares. These were issued to G&G Shops in
     connection with the acquisition and transferred to the liquidating trustee
     in the bankruptcy proceedings for Petrie Retail and its subsidiaries. The
     address of this stockholder is Franklin 145 Corp., c/o Paul Gunther.

(3)  Warrants to purchase class D shares. The address of this stockholder is c/o
     Cerberus Partners LP, 450 Park Avenue, 28th Floor, New York, New York
     10022.

(4)  Includes 3,997 class B shares, representing 22.3% of the outstanding class
     B shares, and warrants to purchase 7,927 class D shares. The address of
     this stockholder is c/o Pegasus Investors, L.P., 99 River Road, Cos Cob,
     Connecticut 06807.

(5)  Includes 3,398 class B shares, representing 19.0% of the outstanding class
     B shares, and warrants to purchase 6,878 class D shares. The address of
     this stockholder is c/o Pegasus Investors, L.P., 99 River Road, Cos Cob,
     Connecticut 06807.

(6)  48.0% beneficial interest in the class A shares. Includes vested options to
     purchase 2,500 class A shares. The address of this stockholder is c/o G+G
     Retail, Inc., 520 Eighth Avenue, New York, New York 10018.

(7)  Includes 1,668 class B shares, representing 9.3% of the outstanding class B
     shares, and warrants to purchase 3,309 shares of class D common stock. The
     address of this stockholder is c/o Pegasus Investors, L.P., 99 River Road,
     Cos Cob, Connecticut 06807.

(8)  Class A common stock.

(9)  Mr. Cogut may be deemed to own beneficially 17,900 (100%) of the class B
     shares, warrants to purchase 36,000 (62.0%) class D shares and 59,101
     (100%) shares of series B preferred stock through his indirect ownership
     interest in Pegasus Partners, L.P., Pegasus Related Partners, L.P., Pegasus
     G&G Retail, L.P. and Pegasus G&G Retail II, L.P. Mr. Cogut beneficially
     owns 100% of the issued and outstanding capital stock of Pegasus Investors
     GP, Inc., a Delaware corporation that is the general partner of Pegasus
     Investors. Pegasus Investors is the general partner of each of Pegasus
     Partners and Pegasus Related Partners. Pegasus Partners and


                                       29





<PAGE>

     Pegasus Related Partners collectively own 100% of the issued and
     outstanding capital stock of Pegasus G&G Retail GP, Inc., a Delaware
     corporation that is the general partner of each of Pegasus G&G Retail and
     Pegasus G&G Retail II. The address of this stockholder is c/o Pegasus
     Investors, L.P., 99 River Road, Cos Cob, Connecticut 06807.

(10) Represents 5.1% of the outstanding class A shares.

(11) Represents 9.2% of the outstanding class A shares.

(12) Represents 1.8% of the outstanding class A shares.

(13) Includes the shares beneficially owned by Mr. Cogut, as described in note
     (9) above, an aggregate of 36,000 warrants to purchase class D shares and
     5,500 vested options to purchase class A shares.

     Information about equity compensation plans is discussed under the heading
"Item 11. Executive Compensation - Stock Option Plan of Holdings."

Item 13. Certain Relationships and Related Transactions

     Donald D. Shack, a member of our Board of Directors, is a shareholder and a
director of the law firm of Shack Siegel Katz & Flaherty P.C., general counsel
to our company and Holdings.

     From February 3, 2002 to April 30, 2003, Pegasus Related Partners, L.P.,
Pegasus G+G Retail, L.P., Pegasus Partners L.P., and Pegasus G+G Retail, II,
L.P., each affiliates of Pegasus Investors LP, have received in the aggregate an
additional 11,077 shares of series B preferred stock of Holdings as dividends on
series B preferred stock that they hold. The class B common stock of Holdings
owned by the affiliates of Pegasus Investors represents approximately 51.4% of
the voting common equity of Holdings outstanding on April 30, 2003, or 42.8%,
assuming the exercise of stock options that were exercisable as of April 30,
2003. As a result of their ownership of Holdings, the affiliates of Pegasus
Investors have the ability to determine the outcome of most corporate actions
that are required to be submitted to Holdings stockholders, other than,
currently, the election of a majority of the Board of Directors of Holdings. In
addition, as holders of class B common stock of Holdings, the affiliates of
Pegasus Investors have special veto rights, which allow them to control the
timing and occurrence of a number of major corporate transactions by us and
Holdings. Craig Cogut, a director of our company and of Holdings, has a 100%
indirect ownership interest in each of the affiliates of Pegasus Investors.

     In August 2002, the Company entered into a consulting agreement with
Pegasus Investors, LP. The agreement was effective as of January 1, 2002, and
provides for an annual consulting fee of $500,000. For the fiscal year ended
February 1, 2003 the Company has recorded $542,000 in connection with this
agreement, of which $500,000 has been paid.

     Lenard Tessler, a director of G+G Retail and Holdings, is a principal of
TGV Partners. TGV Partners and its affiliates hold limited partnership interests
in Pegasus G&G Retail and Pegasus G&G Retail II. Pegasus G&G Retail and Pegasus
G&G Retail II own 31.6% and 31.2% respectively, of the shares and warrants to
purchase shares of Holdings held by the affiliates of Pegasus Investors
described above. See "Item 12. Security Ownership of Certain Beneficial Owners
and Management." Under the limited partnership agreement of Pegasus G&G Retail,
in the event that Holdings has not consummated an initial public offering of its
common stock on or prior to August 28, 2003, TGV Partners may require Pegasus
G&G Retail to exercise its demand registration rights subject to the conditions
described below. Mr. Tessler is a Managing Director of Cerberus Capital
Management, L.P., an investment management firm which controls funds owning in
excess of $49 million of our senior notes. Cerberus G&G Company, LLC, an
affiliate of Cerberus Capital Management, owns 33,996 shares of our series A
preferred stock and warrants to purchase 14,000 shares of our class D common
stock.

     In connection with the acquisition, some of our executive officers
purchased class A common stock including Michael Kaplan who purchased 600 shares
for a purchase price of $70,813, Jeffrey Galin who purchased 840 shares for a
purchase price of $99,138 and James Dodd who purchased 150 shares for a


                                       30





<PAGE>

purchase price of $17,703. During fiscal 2000, Mr. Kaplan purchased 75
additional shares of class A common stock for a purchase price of $8,852. To
fund their purchases of stock, each of these officers borrowed from Holdings, on
a full recourse basis, the total purchase price of the stock purchased, less the
$0.001 par value of the stock that was paid in cash. The total principal amount
of each officer's loan is due on the earlier of the fifth anniversary of the
date of the loan or 30 days following the date on which the officer is no longer
an officer of Holdings or any of its subsidiaries. The outstanding principal
amount of each loan bears interest at the prime rate announced in New York City
by Citibank, N.A. from time to time, payable on a quarterly basis. Each of these
loans is secured by a pledge of the purchased stock.

Stockholder Agreements

     Affiliates of Pegasus Investors are parties to a stockholders agreement
with a number of management stockholders of Holdings, including Jay and Scott
Galin. Under the stockholders agreement, all transfers of class A common stock
by management stockholders are subject to a right of first refusal in favor of
Holdings and the affiliates of Pegasus Investors. In addition, if the affiliates
of Pegasus Investors propose to sell at least 80% of the common equity of
Holdings that they hold, the management stockholders may be required by the
affiliates of Pegasus Investors to sell shares of class A common stock in the
same sale to the same purchaser on the same terms. Furthermore, if one or more
of the affiliates of Pegasus Investors proposes to sell at least 5% of the
common equity of Holdings, the management stockholders will be entitled to sell
the same percentage of their shares of class A common stock in the same sale and
on the same terms.

     Holdings has granted to the affiliates of Pegasus Investors preemptive
rights in connection with equity issuances by Holdings, with limited exceptions.
Holdings has also granted to the affiliates of Pegasus Investors and the
management stockholders demand and piggyback registration rights. Affiliates of
Pegasus Investors or our management stockholders who hold at least 33% of
outstanding class B common stock of Holdings are entitled to demand registration
of their shares after the consummation of a qualified public offering, which
means a public offering of a class of common stock of which at least 20% of the
then outstanding shares are publicly held and which is listed or admitted for
trading on a national securities exchange or quoted on the Nasdaq National
Market. The affiliates of Pegasus Investors who hold at least 33% of the
outstanding class B common stock of Holdings are also entitled to demand
registration of their shares. Any demand registration must be reasonably
expected to yield aggregate gross proceeds of at least $20 million to the
stockholders exercising their registration rights. The affiliates of Pegasus
Investors as a group are entitled to two demand registrations, and the
management stockholders as a group are entitled to one demand registration. The
affiliates of Pegasus Investors and the management stockholders are each
entitled to piggyback registration rights in connection with any registration
statement filed by Holdings, with limited exceptions.

     In addition to their rights to elect directors, under the stockholders
agreement, the affiliates of Pegasus Investors may have the right to appoint an
observer for meetings of the Board of Directors of Holdings. See "Item 10.
Directors and Executive Officers of the Registrant-Board of Directors."

     Under the stockholders agreement, if we terminate certain management
stockholder's employment for cause or if certain management stockholders
terminate their employment without good reason, each of Holdings and the
affiliates of Pegasus Investors has the right to purchase the relevant
management stockholder's shares of class A common stock of Holdings at the lower
of the management stockholder's initial purchase price per share or the fair
market value per share on the effective date of termination. Such right to
purchase Scott Galin's shares terminates upon the earlier of the consummation of
a qualified public offering or August 28, 2003. The right to purchase shares of
the other management stockholders as to whom the right applies terminates upon
the consummation of a qualified public offering.


                                       31





<PAGE>

     The affiliates of Pegasus Investors and Holdings are also parties to a
stockholders agreement with us that requires us and our permitted assigns to
first offer to sell to Holdings and the affiliates of Pegasus Investors, on
specified terms, any class C common stock of Holdings that we and our permitted
assigns, as class C holders, desire to sell. If Holdings and the affiliates of
Pegasus Investors do not elect to purchase the shares, the class C holders may
sell them to a third party on terms no more favorable than the terms proposed to
Holdings and the affiliates of Pegasus Investors. If the proposed third party
purchaser is primarily in the retail apparel business but not primarily in the
girls' and/or women's retail apparel business, the class C holders must again
offer to sell the shares to Holdings and the affiliates of Pegasus Investors. If
Holdings and the affiliates of Pegasus Investors again elect not to purchase the
shares, the class C holders may sell them to the proposed third party on terms
no more favorable than the proposed terms.

     If the affiliates of Pegasus Investors propose to sell at least 50% of the
common equity of Holdings that they hold, they may require the class C holders
to sell Holdings class C common stock in the same sale to the same purchaser on
the same terms. In addition, if one or more of the affiliates of Pegasus
Investors proposes to sell at least 15% of the common equity of Holdings, class
C holders are entitled to sell the same percentage of their class C common stock
in the same sale and on the same terms.

     Class C holders are also entitled to certain demand and piggyback
registration rights. Subject to specified limitations, holders of at least 50%
of outstanding class C common stock are entitled to demand registration of their
shares following the earlier to occur of a qualified public offering or August
28, 2003. The class C holders as a group are entitled to one demand registration
and piggyback registration right in connection with any registration statement
that is filed by Holdings, with limited exceptions.

     In connection with any initial public offering by Holdings, class C holders
are entitled to include on a priority basis in the registration up to one-third
of the registrable shares that they hold, with some limitations. In addition,
Holdings may not, without the consent of holders of a majority of its class C
common stock, grant any demand or piggyback registration rights that have
priority over or are inconsistent with the registration rights granted to class
C holders.

Item 14. Controls and Procedures

     Within the 90-day period prior to the filing date of this report, an
evaluation was carried out under the supervision and with the participation of
the Company's management, including the Chief Executive Officer ("CEO") and
Chief Financial Officer ("CFO"), of the effectiveness of the design and
operation of our disclosure controls and procedures. Based on that evaluation,
the CEO and CFO have concluded that G+G Retail's disclosure controls and
procedures are effective to ensure that material information relating to G+G
Retail and its consolidated subsidiaries including the material information
required to be disclosed in our filings under the Securities Exchange Act of
1934, is recorded, processed, summarized and is made known to them, as
appropriate to allow timely discussion about required disclosures. Subsequent to
the date of management's evaluation, there were no significant changes in our
internal controls or in other factors that could significantly affect the
internal controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.


                                       32





<PAGE>

                                     PART IV

Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

          (a) (1) Financial Statements. See "Index to Financial Statements" on
page F-1.

          (2) Financial Statement Schedule. No financial statement schedules are
required under applicable SEC rules, or the required information is included in
the financial statements or notes thereto and, therefore, have been omitted.

          (3) Exhibits.

<TABLE>
<CAPTION>
Exhibit No.   Description
-----------   -----------
<S>           <C>
2.01          Asset Purchase Agreement, dated as of July 6, 1998, among G&G
              Shops, Inc., the subsidiaries of G&G Shops named therein, the
              subsidiaries of Petrie Retail, Inc. named therein, PSL, Inc. and
              G+G Retail, Inc. (the "Acquisition Agreement").(1)

2.02          Amendment No. 1 to the Acquisition Agreement, dated as of July 27,
              1998.(1)

2.03          Amendment to the Acquisition Agreement, dated August 24, 1998.(1)

3.01          Certificate of Incorporation of G+G Retail.(1)

3.02          Amended and Restated By-Laws of G+G Retail.(1)

4.01          Indenture, dated as of May 17, 1999, by and between G+G Retail, as
              issuer, and U.S. Bank Trust National Association, as trustee.(1)

4.02          Form of 11% Senior Notes due 2006 of G+G Retail.(1)

4.03          A/B Exchange Registration Rights Agreement, dated as of May 17,
              1999, by and between G+G Retail and U.S. Bancorp Libra.(1)

10.01         Agreement of Lease, dated November 28, 1988, between Hartz 83rd
              Street Associates and G&G Shops of Woodbridge, Inc. (the "1988
              Lease").(1)

10.02         Lease Addendum, dated April 10, 1990, to the 1988 Lease.(1)

10.03         Second Lease Modification Agreement, dated February 24, 1994, to
              the 1988 Lease(1)

10.04         Notification Letter, dated November 20, 1995, re: assignment of
              landlord's interest under the 1988 Lease.(1)

10.05         Assignment and Assumption Agreement, dated as of August 28, 1998,
              by and among G&G Shops, the subsidiaries of G&G Shops named
              therein, the subsidiaries of Petrie Retail named therein, PSL and
              G+G Retail.(1)

10.06         Employment Agreement, dated as of August 28, 1998, by and between
              G+G Retail and Jay Galin.(1)

10.07         Employment Agreement, dated as of August 28, 1998, by and between
              G+G Retail and Scott Galin.(1)
</TABLE>


                                       33





<PAGE>

<TABLE>
<S>           <C>
10.08         Letter Agreement, dated October 12, 1998, by and between G+G
              Retail and Michael Kaplan.(1)

10.09         Letter Agreement, dated October 12, 1998, by and between G+G
              Retail and Jeffrey Galin.(1)

10.10         Amendment No. 1 to Employment Agreement, dated as of November 30,
              1998, by and between G+G Retail and Jay Galin.(1)

10.11         Amendment No. 1 to Employment Agreement, dated as of November 30,
              1998, by and between G+G Retail and Scott Galin.(1)

10.12         Bonus Plan for Senior Management Employees of G+G Retail,
              effective February 2, 1999.(1)

10.13         NCR Corporation Master Agreement, effective as of February 9,
              1999, between NCR Corporation and G+G Retail.(1)

10.14         Discount Addendum, effective as of February 26, 1999, between NCR
              Corporation and G+G Retail. Portions of this exhibit have been
              omitted pursuant to an order of confidential treatment granted by
              the Securities and Exchange Commission.(1)

10.15         G&G Retail Holdings, Inc. 1999 Stock Option Plan, effective as of
              March 15, 1999.(1)

10.16         Option Agreement, dated as of March 15, 1999, by and between G&G
              Retail Holdings and Jay Galin.(1)

10.17         Option Agreement, dated as of March 15, 1999, by and between G&G
              Retail Holdings and Scott Galin.(1)

10.18         Service Agreement, dated April 1, 1999, between G+G Retail and G&G
              Retail of Puerto Rico, Inc.(1)

10.19         Master Lease Purchase Agreement, dated as of May 4, 1999, by and
              between Chase Equipment Leasing, Inc. and G+G Retail.(1)

10.20         Addendum to Master Lease Purchase Agreement, effective as of May
              4, 1999, by and between Chase Equipment Leasing and G+G Retail.(1)

10.21         Form of Exchange Agent Agreement between U.S. Bank Trust National
              Association, as exchange agent, and G+G Retail.(1)

10.22         Letter agreement, dated January 18, 2000, amending Employment
              Agreement between G+G Retail and Scott Galin.(2)

10.23         Amendment No. 2 to Employment Agreement, dated as of August 8,
              2000, by and between Jay Galin and G+G Retail, Inc.(3)

10.24         Amendment No. 3 to Employment Agreement, dated as of January 22,
              2001, by and between G+G Retail, Inc. and Jay Galin.(4)

10.25         Amendment No. 3 to Employment Agreement, dated as of January 22,
              2001, by and between G+G Retail, Inc. and Scott Galin.(4)
</TABLE>


                                       34





<PAGE>

<TABLE>
<S>           <C>
10.26         Loan and Security Agreement between the CIT Group/Business Credit,
              Inc. and G+G Retail, Inc., dated as of May 2, 2001.(5)

10.27         Amendment No. 4 to Employment Agreement, dated as of September 11,
              2002, by and between Jay Galin and G+G Retail, Inc.(6)

10.28         Amendment No. 4 to Employment Agreement, dated as of September 11,
              2002, by and between G+G Retail, Inc. and Jay Galin.(6)

10.29         Agreement, dated September 11, 2002 between G+G Retail and Pegasus
              Investors, L.P.(6)

21.01         Subsidiaries of G+G Retail, Inc.(1)

99.1          Certifications pursuant to 18 U.S.C. Section 1350, as adopted
              pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
</TABLE>

----------
(1)  Incorporated by reference to the registration statement on Form S-4 (File
     no. 333-81307) filed by G+G Retail, Inc. on October 4, 1999.

(2)  Incorporated by reference to the annual report of Form 10-K filed by G+G
     Retail, Inc. on April 21, 2000.

(3)  Incorporated by reference to the quarterly report on Form 10-Q filed by G+G
     Retail, Inc. on September 12, 2000.

(4)  Incorporated by reference to the annual report of Form 10-K filed by G+G
     Retail, Inc. on May 4, 2001.

(5)  Incorporated by reference to the quarterly report on Form 10-Q filed by G+G
     Retail, Inc. on June 18, 2001.

(6)  Incorporated by reference to the quarterly report on Form 10-Q filed by G+G
     Retail, Inc. on December 16, 2002.

          (b) Reports on Form 8-K.

          We did not file any Reports on Form 8-K during the quarter ended
February 1, 2003.


                                       35





<PAGE>

             CERTIFICATION PURSUANT TO RULE 13a-14 OF THE SECURITIES
           EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF
                         THE SARBANES-OXLEY ACT OF 2002

     I, Jay Galin, Chief Executive Officer of G + G Retail, Inc., certify that:

     1. I have reviewed this annual report on Form 10-K of G + G Retail, Inc.;

     2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

     3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

     4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

          a. Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;

          b. Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and

          c. Presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

     5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's Board of Directors (or persons performing the
equivalent functions):

          a. All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

          b. Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and

     6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Dated:  April 30, 2003


                                                    /s/ Jay Galin
                                                    ----------------------------
                                                    Jay Galin
                                                    Chief Executive Officer


                                       36





<PAGE>

        CERTIFICATION PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE
               ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF
                         THE SARBANES-OXLEY ACT OF 2002

     I, Michael Kaplan, Chief Financial Officer of G + G Retail, Inc., certify
that:

     1. I have reviewed this annual report on Form 10-K of G + G Retail, Inc.;

     2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

     3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

     4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

          a. Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;

          b. Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and

          c. Presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

     5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's Board of Directors (or persons performing the
equivalent functions):

          a. All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

          b. Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and

     6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Dated:  April 30, 2003


                                                    /s/ Michael Kaplan
                                                    ----------------------------
                                                    Michael Kaplan
                                                    Chief Financial Officer


                                       37





<PAGE>

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                          <C>
G+G RETAIL, INC.

Report of Independent Auditors ..............................................F-2

Consolidated Balance Sheets as of February 1, 2003 and February 2, 2002 .....F-3

Consolidated Statements of Operations for the Years ended February 1,
2003, February 2, 2002 and February 3, 2001 .................................F-4

Consolidated Statements of Stockholder's Equity for the Years ended
February , 003, February 2, 2002 and February 3, 2001 .......................F-5

Consolidated Statements of Cash Flows for the Years ended February 1,
2003, February 2, 2002 and February 3, 2001 .................................F-6

Notes to Consolidated Financial Statements ..................................F-7
</TABLE>


                                       F-1





<PAGE>

                         Report of Independent Auditors

The Board of Directors
G+G Retail, Inc.

We have audited the accompanying consolidated balance sheets of G+G Retail, Inc.
and its subsidiary (collectively, the "Company") as of February 1, 2003 and
February 2, 2002 and the related consolidated statements of operations,
stockholder's equity and cash flows for each of the three years in the period
ended February 1, 2003. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatements. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall consolidated financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of the
Company at February 1, 2003 and February 2, 2002 and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended February 1, 2003, in conformity with accounting principles generally
accepted in the United States.

As discussed in Note 2 to the consolidated financial statements, in 2002 the
Company adopted Statement of Financial Accounting Standards No. 142 relating to
goodwill and indefinite lived intangibles.


                                                       /s/ Ernst & Young LLP

March 11, 2003


                                      F-2





<PAGE>

                                G+G Retail, Inc.

                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                           February   February
                                                            1, 2003    2, 2002
                                                           --------   --------
                                                              (In Thousands)
<S>                                                        <C>        <C>
Assets
Current assets:
   Cash and short-term investments                         $ 21,526   $ 15,328
   Accounts receivable                                        1,782        888
   Merchandise inventories                                   15,575     15,401
   Prepaid taxes and other expenses                           1,791      1,730
   Deferred tax assets                                        2,436      1,729
                                                           --------   --------
Total current assets                                         43,110     35,076

Property and equipment, net                                  52,983     52,075
Deferred financing costs, net                                 2,971      3,991
Goodwill, net                                                57,720     57,720
Trademarks, net                                              45,900     45,900
Other assets                                                    184        198
                                                           --------   --------
Total assets                                               $202,868   $194,960
                                                           ========   ========

Liabilities and stockholder's equity
Current liabilities:
   Accounts payable                                        $ 16,756   $ 14,886
   Accrued expenses                                          20,609     16,363
   Accrued interest                                           2,517      2,517
   Current portion of capital lease                           1,719      1,549
                                                           --------   --------
Total current liabilities                                    41,601     35,315

Deferred tax liability                                        3,220      2,105
Capital lease                                                   944      2,656
Long-term debt                                              102,563    101,510
                                                           --------   --------
Total liabilities                                           148,328    141,586

Commitments and contingencies

Stockholder's equity:
   Class B common stock, par value $.01 per share, 1,000
      shares authorized, 10 shares issued and outstanding        --         --
   Additional paid-in capital                                50,298     50,298
   Retained earnings                                          4,242      3,076
                                                           --------   --------
Total stockholder's equity                                   54,540     53,374
                                                           --------   --------
Total liabilities and stockholder's equity                 $202,868   $194,960
                                                           ========   ========
</TABLE>

See accompanying notes.


                                      F-3





<PAGE>

                                G+G Retail, Inc.

                      Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                         Year ended
                                               ------------------------------
                                               February   February   February
                                                1, 2003    2, 2002    3, 2001
                                               --------   --------   --------
                                                       (In Thousands)
<S>                                            <C>        <C>        <C>
Net sales                                      $411,172   $380,428   $350,040

Cost of sales (including occupancy costs)       252,650    234,525    217,032
Selling, general, administrative and buying     130,889    119,893    107,928
Depreciation and amortization                    11,394     14,824     13,178
                                               --------   --------   --------
Operating income                                 16,239     11,186     11,902

Interest expense                                 14,345     14,468     14,343
Interest income                                     133        157        331
                                               --------   --------   --------
Income (loss) before provision (benefit) for
   income taxes                                   2,027     (3,125)    (2,110)

Provision (benefit) for income taxes                861     (1,327)      (808)
                                               --------   --------   --------
Net income (loss)                              $  1,166   $ (1,798)  $ (1,302)
                                               ========   ========   ========
</TABLE>

See accompanying notes.


                                      F-4





<PAGE>

                                G+G Retail, Inc.

                Consolidated Statements of Stockholder's Equity

      Years ended February 1, 2003, February 2, 2002 and February 3, 2001
                                 (In Thousands)

<TABLE>
<CAPTION>
                                        Additional                  Total
                               Common    Paid-In     Retained   Stockholder's
                               Stock     Capital     Earnings      Equity
                               ------   ----------   --------   -------------
<S>                              <C>      <C>         <C>          <C>
Balance - January 29, 2000       $--      $50,298     $ 6,176      $56,474
   Net loss                                            (1,302)      (1,302)
                                 ---      -------     -------      -------
Balance - February 3, 2001        --       50,298       4,874       55,172
   Net loss                                            (1,798)      (1,798)
                                 ---      -------     -------      -------
Balance - February 2, 2002        --       50,298       3,076       53,374
   Net income                                           1,166        1,166
                                 ---      -------     -------      -------
Balance - February 1, 2003       $--      $50,298     $ 4,242      $54,540
                                 ===      =======     =======      =======
</TABLE>

See accompanying notes.


                                      F-5





<PAGE>

                                G+G Retail, Inc.

                     Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                            Year ended
                                                                  ------------------------------
                                                                  February   February   February
                                                                   1, 2003    2, 2002    3, 2001
                                                                  --------   --------   --------
                                                                          (In Thousands)
<S>                                                               <C>        <C>        <C>
Operating activities
Net income (loss)                                                 $  1,166   $ (1,798)  $ (1,302)
Adjustments to reconcile net income (loss) to net
   cash provided by operating activities:
      Depreciation and amortization                                 11,394     14,824     13,178
      Amortization of debt issue costs                               2,073      1,912      1,844
      Write-off of closed store fixed assets                           336        335        155
      Deferred income taxes                                            408     (1,327)     3,070
      Changes in assets and liabilities:
         Accounts receivable, prepaid expenses and other assets       (941)       112     (1,268)
         Merchandise inventories                                      (174)       (72)    (2,461)
         Accounts payable, accrued expenses and accrued
            interest                                                 6,116       (329)     8,942
         Income taxes payable                                           --         --     (3,250)
                                                                  --------   --------   --------
Net cash provided by operating activities                           20,378     13,657     18,908

Investing activities
Capital expenditures                                               (12,638)   (11,540)   (26,295)
                                                                  --------   --------   --------
Net cash used in investing activities                              (12,638)   (11,540)   (26,295)

Financing activities
Proceeds from short-term borrowings                                     --     31,166     18,400
Proceeds from capital lease                                             --        382      3,826
Payment of short-term borrowings                                        --    (31,166)   (18,400)
Payment of debt issuance costs                                          --       (399)      (169)
Payment of capital lease obligations                                (1,542)    (1,340)      (795)
                                                                  --------   --------   --------
Net cash (used in) provided by financing activities                 (1,542)    (1,357)     2,862
                                                                  --------   --------   --------

Net increase (decrease) in cash and short-term investments           6,198        760     (4,525)
Cash and short-term investments, beginning of period                15,328     14,568     19,093
                                                                  --------   --------   --------
Cash and short-term investments, end of period                    $ 21,526   $ 15,328   $ 14,568
                                                                  ========   ========   ========
Supplemental cash flow disclosures
Cash paid during the period for:
   Interest                                                       $ 12,272   $ 12,549   $ 12,436
                                                                  ========   ========   ========
   Income taxes, net of cash refunds of $31, $77 and
      $1,227 for the years ended February 1, 2003,
      February 2, 2002 and February 3, 2001, respectively         $    324   $    152   $    230
                                                                  ========   ========   ========
</TABLE>

See accompanying notes.


                                      F-6





<PAGE>

                                G+G Retail, Inc.

                   Notes to Consolidated Financial Statements

                                February 1, 2003

1.   Organization and Business

G+G Retail, Inc. ("G+G" or the "Company") was incorporated on June 26, 1998. On
August 28, 1998, G&G Retail Holdings, Inc. ("Holdings" or the "Parent") acquired
100% of G+G's outstanding common stock. Simultaneous with the aforementioned
transaction, the Company acquired (the "Acquisition") substantially all of the
assets and certain liabilities of G & G Shops, Inc. ("G & G Shops" or the
"Predecessor") and certain other subsidiaries of Petrie Retail, Inc. ("Petrie")
from Petrie. The Acquisition was accounted for as a purchase. Holdings has no
operations other than owning all of the capital stock of the Company and is
dependent on the cash flows from the Company to meet its obligations, including
its mandatory redeemable preferred stock due 2008.

Prior to August 28, 1998, G+G's business was conducted by G & G Shops, a
wholly-owned subsidiary of Petrie, and certain other subsidiaries of Petrie. As
part of the Acquisition, 15,000 shares of Class C, non-voting common stock of
Holdings were issued to the Predecessor. These shares, which represent
approximately 14% of Holdings common stock on a fully-diluted basis, were
transferred to the liquidating trustee who oversees the bankruptcy proceedings
for Petrie and its subsidiaries in connection with the confirmation of Petrie's
plan of reorganization.

2.   Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The accompanying financial statements include the consolidated operations of G+G
and its wholly-owned subsidiary. All significant intercompany transactions and
balances have been eliminated in consolidation.

Nature of Business

The Company owns and operates a chain of young women's and pre-teen's specialty
apparel stores in the United States, Puerto Rico and the U.S. Virgin Islands.

Cash and Short-Term Investments

Short-term investments of $17.1 million and $12.3 million at February 1, 2003
and February 2, 2002, respectively, consist of time deposits, U.S. treasury
money market funds, and commercial paper of less than ninety days maturity. Cash
in excess of the


                                      F-7





<PAGE>

                                G+G Retail, Inc.

             Notes to Consolidated Financial Statements (continued)

2.   Summary of Significant Accounting Policies (continued)

Federal Deposit Insurance Corporation's insurance limit of $100,000 as of
February 1, 2003 and February 2, 2002 was approximately $17.1 million and $12.2
million, respectively. The Company has mitigated the risk by placing its
temporary cash investments with high credit quality institutions to limit its
credit exposure.

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions related to certain accounts, such as inventory, accounts
receivable, income taxes and various other reserves, that affect the amounts
reported in the consolidated financial statements and accompanying notes. Actual
results could differ from those estimates.

Concentration of Risk

The Company operates a distribution center that depends on employees under a
collective bargaining agreement with a union. Historically, the Company has not
experienced labor disruptions as a result of disputes with its union workers.

The Company has significant merchandise purchases from vendors who utilize
factors. Approximately 29% of the Company's merchandise purchases are from three
vendors. In addition, approximately 19% of the stores are leased from a single
landlord.

Fiscal Year

The Company's fiscal year ends on the Saturday nearest January 31 and consists
of fifty-two or fifty-three weeks. The fiscal years ended February 1, 2003,
February 2, 2002 and February 3, 2001 consisted of fifty-two weeks, fifty-two
weeks and fifty-three weeks, respectively.

Inventories

Merchandise inventories, which consist of finished goods, are valued at the
lower of cost as determined by the retail inventory method (average cost basis)
or market.


                                      F-8





<PAGE>

                                G+G Retail, Inc.

             Notes to Consolidated Financial Statements (continued)

2.   Summary of Significant Accounting Policies (continued)

Property and Equipment

Property and equipment are recorded at cost. Depreciation and amortization of
property and equipment are computed by the straight-line method based on the
estimated useful lives of the assets as follows:

<TABLE>
<S>                              <C>
Leasehold costs, interests and   Term of lease or 10 years, whichever is less,
improvements                     straight-line

Store fixtures and equipment     1 to 10 years, straight-line
</TABLE>

Deferred Financing Costs

The Company capitalizes debt issuance costs, with such costs amortized over the
lives of the related debt. Included in deferred financing costs are $5.8 million
of fees associated with the $107.0 million Senior Notes, which is being
amortized over seven years, and $568,000 of fees associated with the Facility
(see Note 4), which is being amortized over three years. Amortization of
deferred financing costs, which is included in interest expense in the
consolidated statements of operations, totaled approximately $1,020,000,
$973,000 and $940,000 for the years ended February 1, 2003, February 2, 2002 and
February 3, 2001. The accumulated amortization of deferred financing costs as of
February 1, 2003 and February 2, 2002 was $3.4 million and $2.4 million,
respectively.

Goodwill and Other Indefinite Lived Intangible Assets

The Company adopted Statement of Accounting Standards ("SFAS") No. 142, Goodwill
and Other Intangible Assets, effective February 3, 2002 (the first day of fiscal
2003). Under SFAS 142, goodwill and other intangible assets that have indefinite
useful lives are no longer amortized, but are subject to at least an annual
assessment of impairment by applying a fair value based test, as specifically
provided in the Statement. The Company completed the required initial impairment
test on its goodwill as of the first day of fiscal 2003 along with its annual
impairment test on its indefinite lived intangible assets (trademarks) in the
fourth quarter of fiscal 2003. In both instances, it was determined that there
was no impairment to its recorded goodwill or indefinite lived intangible
assets.

Had the Company been accounting for its goodwill and indefinite lived intangible
assets under SFAS No. 142 for all periods presented, the Company's net income
would have been as follows:


                                      F-9





<PAGE>

                                G+G Retail, Inc.

             Notes to Consolidated Financial Statements (continued)

2.   Summary of Significant Accounting Policies (continued)

<TABLE>
<CAPTION>
                                                             Year ended
                                                    ------------------------------
                                                    February   February   February
                                                     1, 2003    2, 2002    3, 2001
                                                    --------   --------   --------
                                                            (In Thousands)
<S>                                                  <C>        <C>        <C>
Reported net income (loss)                           $1,166     $(1,798)   $(1,302)
Add back amortization of goodwill and
   indefinite lived intangible assets, net of tax        --       2,243      2,408
                                                     ------     -------    -------
Pro forma net income                                 $1,166     $   445    $ 1,106
                                                     ======     =======    =======
</TABLE>

The accumulated amortization of goodwill and trademarks as of February 1, 2003
and February 2, 2002 was $13.3 million.

Impairment of Long-Lived Assets

The Company reviews long-lived assets, including property, plant and equipment
and intangible assets, for impairment whenever events or changes in business
circumstances indicate that the carrying amount of the assets may not be fully
recoverable. The Company assesses impairment in accordance with the requirements
of SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.
An impairment loss would be recognized when estimated undiscounted future cash
flows expected to result from the use of the asset and its eventual disposition
is less than its carrying amount. Impairment, if any, is assessed using
discounted cash flows. No impairments have occurred in the three years ended
February 1, 2003.

Asset Retirement Obligations

The Company adopted SFAS No. 143, Accounting for Asset Retirement Obligations
("SFAS 143") effective February 3, 2002 (the first day of fiscal 2003). SFAS 143
requires entities to record the fair value of the estimated liability for an
asset retirement obligation in the period in which it is incurred. When the
liability is initially recorded, the entity capitalizes an amount equal to the
present value of the estimated liability by increasing the carrying amount of
the long-lived asset. Over time, the liability is accreted to its present value
each period, and the capitalized cost is depreciated over the useful life of the
related asset. Upon settlement of the liability, the entity either settles the
obligation for its recorded amount or incurs a gain or loss upon settlement. The
adoption of SFAS 143 did not have any impact on the Company's consolidated
financial statements.


                                      F-10





<PAGE>

                                G+G Retail, Inc.

             Notes to Consolidated Financial Statements (continued)

2.   Summary of Significant Accounting Policies (continued)

Rental Expense

Rental escalations are recognized on a straight-line basis over the term of the
related lease in order to provide level recognition of rental expense. Rent
concessions received from landlords are recognized on a straight-line basis over
the remaining term of the respective lease agreements.

Income Taxes

Income taxes are accounted for by the liability method. Under this method,
deferred tax assets and liabilities are determined based on the difference
between financial reporting and tax basis of assets and liabilities and are
measured using the current enacted tax rates and laws that will be in effect
when the differences are expected to reverse.

Revenue Recognition

Retail merchandise sales are recognized at the point of sale. A reserve is
provided for projected returns based on prior experience. Income from layaway
sales is recognized after final payment from the customer has been received.

Preopening Costs

Store opening costs are charged to operations as incurred.

Advertising and Marketing

All costs associated with advertising and marketing are expensed as incurred.
Advertising and marketing expense was $3.2 million, $3.1 million and $2.5
million for the years ended February 1, 2003, February 2, 2002 and February 3,
2001, respectively.

Vendor Allowances

Vendor allowances are recognized when the Company receives an executed allowance
agreement from its vendors. These allowances are recorded as a reduction of cost
of sales.


                                      F-11





<PAGE>

                                G+G Retail, Inc.

             Notes to Consolidated Financial Statements (continued)

2.   Summary of Significant Accounting Policies (continued)

Segments Reporting

The Company operates a chain of 570 young women's and pre-teen's specialty
apparel stores in the United States, Puerto Rico and the U.S. Virgin Islands.
Primarily all of the 570 stores are mall based and the customers served are
young women principally between the ages of thirteen and nineteen years old and
pre-teens between the ages of six and twelve years old. All of the Company's
merchandise is distributed to its stores from the same distribution center.

The Company conducts business in one operating segment, consisting of the
Company's 570 individual store operations. These individual operations have been
aggregated into one segment because the Company believes it helps the users to
understand the Company's performance. The combined operations have similar
economic characteristics and each operation has similar products, services,
customers and distribution network.

Effects of Recently Issued Accounting Standards

In April 2002, the FASB issued SFAS No.145, Rescission of FASB Statements No 4,
44 and 62, Amendment of FASB Statement No. 13, and Technical Corrections ("SFAS
145"). SFAS 145 eliminates the requirement under SFAS No. 4, Reporting Gains and
Losses from Extinguishment of Debt, to report gains and losses from
extinguishments of debt as extraordinary items in the income statement.
Accordingly, gains or losses from extinguishments of debt for fiscal years
beginning after May 15, 2002 shall not be reported as extraordinary item under
the provisions of APB Opinion No. 30, Reporting the Results of Operations -
Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently Occurring Events and Transactions. Upon adoption of
this pronouncement, any gain or loss on extinguishments of debt previously
classified as an extraordinary item in prior periods presented that does not
meet the criteria of Opinion 30 for such classification should be reclassified
to conform with the provisions of SFAS 145. Management does not believe the
adoption of this standard will have a material impact on the consolidated
financial statements.

In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities ("SFAS 146") and nullifies EITF Issue No. 94-3,
Liability Recognition for Certain Employees Termination Benefits and Other Costs
to Exit an Activity (including Certain Costs Incurred in a Restructuring). SFAS
146 requires that a


                                      F-12





<PAGE>

                                G+G Retail, Inc.

             Notes to Consolidated Financial Statements (continued)

2.   Summary of Significant Accounting Policies (continued)

liability for a cost associated with an exit or disposal activity be recognized
when the liability is incurred, whereas EITF No. 94-3 had recognized the
liability at the commitment date to an exit plan. The Company is required to
adopt the provisions of SFAS 146 effective for exit or disposal activities
initiated after December 31, 2002. Management does not believe the adoption of
this standard will have a material impact on the consolidated financial
statements.

3.   Property and Equipment

Property and equipment consist of the following:

<TABLE>
<CAPTION>
                                                     February   February
                                                      1, 2003    2, 2002
                                                     --------   --------
                                                        (In Thousands)
<S>                                                  <C>        <C>
Leasehold costs, improvements, interests and store
   fixtures and equipment                            $ 92,592   $ 83,400
Less accumulated depreciation and amortization        (39,609)   (31,325)
                                                     --------   --------
                                                     $ 52,983   $ 52,075
                                                     ========   ========
</TABLE>

Depreciation and amortization on property and equipment totaled approximately
$11,394, $10,926 and $9,276 for the years ended February 1, 2003, February 2,
2002 and February 3, 2001, respectively.

4.   Debt

Long-Term Borrowings

On May 17, 1999, the Company and Holdings completed a private placement of
107,000 units consisting in the aggregate of $107.0 million face amount of 11%
Senior Notes due May 15, 2006 of the Company with interest payable semi-annually
and warrants to purchase 8,209 shares of non-voting Class D Common Stock of
Holdings at an exercise price of $.01 per share. The warrants were valued at
$470,000, using the Black-Scholes Option Valuation Model, which assumed a
risk-free interest rate of 4.6% and a volatility factor of 15%. The net proceeds
from the placement were $93.9 million after deducting the original issue
discount of $7.3 million and $5.8 million of fees. The net proceeds were used to
repay the $90 million Loan Agreement entered into in connection with the


                                      F-13





<PAGE>

                                G+G Retail, Inc.

             Notes to Consolidated Financial Statements (continued)

4.   Debt (continued)

Acquisition (see Note 1) and the balance of the net proceeds were used for
general corporate purposes. The amortization of the original issue discount and
the warrants totaled approximately $1,053,000, $939,000 and $840,000 for the
years ended February 1, 2003, February 2, 2002 and February 3, 2001,
respectively, and are included in interest expense in the accompanying
consolidated statement of operations. The carrying amount of the Senior Notes
approximated fair value at February 1, 2003 and February 2, 2002.

On November 2, 1999, the private placement units were exchanged for notes that
are freely tradeable.

On or after May 15, 2003, the Company may redeem all or a part of the Senior
Notes as follows: from May 15, 2003 through May 14, 2004 at 105.50% of their
principal amount; from May 15, 2004 through May 14, 2005 at 102.75% of their
principal amount and on and after May 15, 2005 at 100.00% of their principal
amount, in each case in addition to accrued and unpaid interest and any
liquidated damages.

Each of the Company's domestic subsidiaries (other than subsidiaries which the
Company may designate as unrestricted) is required to guarantee, on a senior but
unsecured basis, the Company's obligations under the Senior Notes. Currently,
the Company has only one subsidiary, G & G Retail of Puerto Rico, Inc., which is
an inactive foreign subsidiary and is not a guarantor. Each subsidiary
guarantor's obligations under its guarantee will be limited to the extent
necessary to prevent that guarantee from being a fraudulent conveyance under
applicable law. All subsidiary guarantors will be limited in their ability to
sell or otherwise dispose of all or substantially all of their assets to, or
consolidate with or merge with or into, a person other than the Company or
another subsidiary guarantor. Subsidiary guarantees may be released under
limited circumstances.

Any Class D Common Stock of Holdings outstanding will be automatically converted
into one class of voting common stock upon the consummation of an initial public
offering which results in at least 20% of Holdings' common stock becoming
publicly traded ("IPO"). The warrants will expire upon the earlier of the
consummation of an IPO (as defined) or ten years from the date of issuance.


                                      F-14





<PAGE>

                                G+G Retail, Inc.

             Notes to Consolidated Financial Statements (continued)

4.   Debt (continued)

Short-Term Borrowings

On May 2, 2001, the Company entered into a Loan and Security Agreement (the
"Facility"). The Facility expires in May 2004, and provides for a revolving
credit facility subject to eligible inventory and credit card receivables, not
to exceed $30.0 million, of which $10.0 million can be used for letters of
credit. There were no outstanding borrowings under the Facility at February 1,
2003 and February 2, 2002. Outstanding letters of credit under the Facility
totaled approximately $432,500 and $449,000 at February 1, 2003 and February 2,
2002, respectively. Interest on outstanding borrowings can range either from
Prime to Prime plus .25% or from 1.50% over the Eurodollar Rate to a maximum
2.25% over the Eurodollar Rate, based on the profitability and amount of
indebtedness of the Company. A commitment fee of 0.25% per annum is payable
monthly on any unused amount under the Facility. An administrative fee of
$30,000 is payable annually.

The Facility contains a minimum tangible net worth covenant and other customary
covenants including limitations on change of ownership, transactions with
affiliates, dividends, additional indebtedness, creation of liens, asset sales,
acquisitions, conduct of business and capital expenditures. The Facility also
contains customary events of default including defaults on the Company's other
indebtedness.

The Company's obligations under the Facility are secured by a lien on all or
substantially all of the Company's assets.

5.   Stock Option Plan

Effective March 15, 1999, Holdings adopted its 1999 Stock Option Plan (the
"Option Plan") which provides for the granting of options to purchase shares of
its Class A Common Stock to its employees and employees of its subsidiaries
including the Company. The Option Plan is administered by the Board of Directors
of Holdings which is authorized to grant incentive stock options and/or
non-qualified stock options to purchase up to 7,000 shares of Class A Common
Stock. On March 15, 1999, Holdings granted under the Option Plan, ten year
options to purchase 5,000 shares of its Class A Common Stock at an exercise
price of $300 per share of which 1,250 shares became immediately exercisable and
the remaining 3,750 shares vested equally over the three years following the
date of grant.


                                      F-15





<PAGE>

                                G+G Retail, Inc.

             Notes to Consolidated Financial Statements (continued)

5.   Stock Option Plan (continued)

On October 19, 1999, Holdings granted under the Option Plan, ten year options to
purchase 2,000 shares of its Class A Common Stock at an exercise price of $300
per share, which vested equally over the three years following the date of
grant. The option prices exceeded the fair market value of Holdings common stock
on the date of grant.

6.   Related Party Transactions

A director ("Director") of the Company and shareholder of Holdings is also a
member of the law firm which is principal legal counsel to the Company.
Professional fees paid and expenses reimbursed to the Director's firm totaled
approximately $518,000, $499,000 and $802,000 for the years ended February 1,
2003, February 2, 2002 and February 3, 2001, respectively.

In August 2002, the Company entered into a consulting agreement with an indirect
investor in G&G Retail Holdings, Inc., the parent company. The agreement was
retroactive to January 1, 2002, and provides for an annual consulting fee of
$500,000. For the fiscal year ended February 1, 2003, the Company has recorded
$542,000 of expense in connection with this agreement, of which $500,000 has
been paid through February 1, 2003.

7.   Obligations Under Capital Leases

Maturities of obligations under capital leases for equipment are as follows:

<TABLE>
<CAPTION>
                                              (In Thousands)
                                              --------------
<S>                                               <C>
Fiscal year ending in:
   2004                                           $1,941
   2005                                              961
   Thereafter                                         --
                                                  ------
Total minimum lease payments                       2,902
Less amount representing interest                   (239)
                                                  ------
Present value of net minimum lease payments       $2,663
                                                  ======
</TABLE>


                                      F-16





<PAGE>

                                G+G Retail, Inc.

             Notes to Consolidated Financial Statements (continued)

7.   Obligations Under Capital Leases (continued)

At both February 1, 2003 and February 2, 2002, the gross amount of assets under
capital leases is $6.4 million, and the related accumulated amortization is $3.0
million and $1.9 million, respectively. The amortization of assets under capital
leases are included in depreciation and amortization expense in the accompanying
consolidated statements of operations.

8.   Income Taxes

The following is a summary of the provision (benefit) for income taxes:

<TABLE>
<CAPTION>
                                                        Year ended
                                             ------------------------------
                                             February   February   February
                                             1, 2003    2, 2002    3, 2001
                                             --------   --------   --------
                                                     (In Thousands)
<S>                                            <C>       <C>        <C>
Current income taxes:
   Federal                                     $ --      $    --    $  --
   State and Puerto Rico                        150           --       --
Deferred income taxes:
   Federal                                      561         (983)    (814)
   State and Puerto Rico                        150         (344)       6
                                               ----      -------    -----
Total provision (benefit) for income taxes     $861      $(1,327)   $(808)
                                               ====      =======    =====
</TABLE>

A reconciliation of the income tax provision (benefit) to the amount of the
(benefit) provision that would result from applying the federal statutory rate
(34%) to income before taxes is as follows:

<TABLE>
<CAPTION>
                                                                 Year ended
                                                       ------------------------------
                                                       February   February   February
                                                        1, 2003    2, 2002   3, 2001
                                                       --------   --------   --------
<S>                                                      <C>        <C>        <C>
Provision for income taxes at federal statutory rate     34.0%      34.0%      34.0%
State income taxes, net of federal tax benefit            9.8        5.5        5.7
Tax credits                                                --        3.5         --
Other                                                    (1.3)      (0.5)      (1.4)
                                                         ----       ----       ----
Effective tax rate                                       42.5%      42.5%      38.3%
                                                         ====       ====       ====
</TABLE>


                                      F-17





<PAGE>

                                G+G Retail, Inc.

             Notes to Consolidated Financial Statements (continued)

8.   Income Taxes (continued)

Deferred income taxes reflect the net effect of temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes. Significant components of the
Company's deferred tax assets and liabilities are as follows:

<TABLE>
<CAPTION>
                                              February   February
                                              1, 2003    2, 2002
                                              --------   --------
                                                 (In Thousands)
<S>                                            <C>        <C>
Current deferred tax asset:
   Accrued expenses                            $ 1,901    $ 1,194
   Inventory cost capitalization                   535        535
                                               -------    -------
                                               $ 2,436    $ 1,729
                                               =======    =======

Long-term deferred tax (liability) asset:
   Difference between book and tax basis of
      fixed assets                             $ 1,144    $ 1,305
   Intangible asset                             (9,072)    (5,961)
   Net operating loss carryforward               4,616      2,711
   Other                                            92       (160)
                                               -------    -------
                                               $(3,220)   $(2,105)
                                               =======    =======
</TABLE>

The Company has net operating loss carryforwards at February 1, 2003 of
approximately $11.5 million for federal income tax purposes, which begin to
expire in 2020.

9.   Employee Benefit Plans

G+G maintains a defined contribution plan for all eligible employees that is
funded on a current basis through discretionary contributions. Contribution
expense was $700,000, $700,000 and $686,000 for the years ended February 1,
2003, February 2, 2002 and February 3, 2001, respectively.

G+G also maintains 401(k) plans covering certain of its employees. The Company
at its discretion can make contributions to the plans; however, no contributions
were made for the years ended February 1, 2003, February 2, 2002 or February 3,
2001.


                                      F-18





<PAGE>

                                G+G Retail, Inc.

             Notes to Consolidated Financial Statements (continued)

9.   Employee Benefit Plans (continued)

G+G also maintains a defined contribution plan covering certain of its union
employees at its distribution center. Contribution expense was approximately
$87,000, $74,000 and $53,000 for the years ended February 1, 2003, February 2,
2002 and February 3, 2001, respectively.

10.  Commitments and Contingencies

The Company has employment agreements with two key employees, providing for
minimum aggregate annual compensation of approximately $2.0 million per annum,
which expire in August 2007. The employment agreements also provide for various
incentive compensation payments as determined by the Company's Board of
Directors. If these employees terminate their employment with the Company for
good reason or the Company terminates their employment without cause, these
employees can elect an aggregate lump sum payment of $5.0 million or an
aggregate payment of $7.0 million paid in thirty equal monthly installments. In
addition, if these employees are terminated due to a change of control, the
employees can elect an aggregate lump sum payment of $5.5 million or an
aggregate lump sum payment of $6.5 million in thirty equal monthly installments.

The Company is committed under operating leases for its stores and warehouse
facility, and equipment leases having initial terms of one year or more expiring
on various dates to 2012. Certain leases provide for additional rentals based on
a percentage of sales and for additional payments covering real estate taxes,
common area charges and other occupancy costs. Rent concessions recognized in
the years ended February 1, 2003, February 2, 2002 and February 3, 2001
approximated $24,000, $68,000 and $157,000, respectively.

A summary of rental expense under all leases is as follows:

<TABLE>
<CAPTION>
                                Year ended
                     --------------------------------
                     February    February    February
                     1, 2003     2, 2002     3, 2001
                     --------   ----------   --------
                             (In Thousands)
<S>                   <C>         <C>         <C>
Fixed minimum         $32,362     $30,810     $26,992
Percentage rentals      2,212       1,630       1,592
Equipment rentals         711         705         660
                      -------     -------     -------
                      $35,285     $33,145     $29,244
                      =======     =======     =======
</TABLE>


                                      F-19





<PAGE>

                                G+G Retail, Inc.

             Notes to Consolidated Financial Statements (continued)

10.  Commitments and Contingencies (continued)

Minimum annual lease commitments (excluding percentage rents and early
termination provisions) under noncancelable operating leases for subsequent
periods are as follows:

<TABLE>
<CAPTION>
                         (In Thousands)
                         --------------
<S>                         <C>
Fiscal year ending in:
   2004                     $ 31,356
   2005                       28,035
   2006                       24,862
   2007                       19,367
   2008                       15,327
   Thereafter                 41,235
                            --------
                            $160,182
                            ========
</TABLE>

Litigation

The Company is a defendant in various lawsuits arising in the ordinary course of
its business. While the ultimate liability, if any, arising from these claims
cannot be predicted with certainty, the Company is of the opinion that the
resolution of the lawsuits will not likely have a material adverse effect on the
Company's consolidated financial statements.

11.  Accrued Expenses

Accrued expenses consist of the following:

<TABLE>
<CAPTION>
                                      February   February
                                       1, 2003    2, 2002
                                      --------   --------
                                         (In Thousands)
<S>                                    <C>        <C>
Salaries and employee benefit costs    $ 5,827    $ 4,640
Rent/occupancy costs                     6,048      4,981
Corporate and store operating costs      8,734      6,742
                                       -------   --------
                                       $20,609    $16,363
                                       =======   ========
</TABLE>


                                      F-20





<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, on the
30th day of April, 2003.

                                             G+G RETAIL, INC.


                                             By: /s/ Jay Galin
                                                 -------------------------------
                                                 Jay Galin
                                                 Chairman of the Board and
                                                 Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been duly signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
       Signature                             Title                           Date
       ---------                             -----                           ----
<S>                       <C>                                           <C>


/s/ Jay Galin             Chairman of the Board,                        April 30, 2003
-----------------------   Chief Executive Officer and Director
Jay Galin                 (Principal Executive Officer)


/s/ Scott Galin           President, Chief Operating Officer            April 30, 2003
-----------------------   and Director
Scott Galin


/s/ Michael Kaplan        Senior Vice President, Chief Financial        April 30, 2003
-----------------------   Officer, Treasurer and Secretary (Principal
Michael Kaplan            Financial and Principal Accounting Officer)


/s/ Donald D. Shack       Director                                      April 30, 2003
-----------------------
Donald D. Shack


/s/ Craig Cogut           Director                                      April 30, 2003
-----------------------
Craig Cogut


/s/ Lenard Tessler        Director                                      April 30, 2003
-----------------------
Lenard Tessler
</TABLE>





<PAGE>

                                  Exhibit Index

<TABLE>
<CAPTION>
Exhibit No.   Description
-----------   -----------
<S>           <C>
 2.01         Asset Purchase Agreement, dated as of July 6, 1998, among G&G
              Shops, Inc., the subsidiaries of G&G Shops named therein, the
              subsidiaries of Petrie Retail, Inc. named therein, PSL, Inc. and
              G+G Retail, Inc. (the "Acquisition Agreement").(1)

 2.02         Amendment No. 1 to the Acquisition Agreement, dated as of July 27,
              1998.(1)

 2.03         Amendment to the Acquisition Agreement, dated August 24, 1998.(1)

 3.01         Certificate of Incorporation of G+G Retail.(1)

 3.02         Amended and Restated By-Laws of G+G Retail.(1)

 4.01         Indenture, dated as of May 17, 1999, by and between G+G Retail, as
              issuer, and U.S. Bank Trust National Association, as trustee.(1)

 4.02         Form of 11% Senior Notes due 2006 of G+G Retail.(1)

 4.03         A/B Exchange Registration Rights Agreement, dated as of May 17,
              1999, by and between G+G Retail and U.S. Bancorp Libra.(1)

10.01         Agreement of Lease, dated November 28, 1988, between Hartz 83rd
              Street Associates and G&G Shops of Woodbridge, Inc. (the "1988
              Lease").(1)

10.02         Lease Addendum, dated April 10, 1990, to the 1988 Lease.(1)

10.03         Second Lease Modification Agreement, dated February 24, 1994, to
              the 1988 Lease(1)

10.04         Notification Letter, dated November 20, 1995, re: assignment of
              landlord's interest under the 1988 Lease.(1)

10.05         Assignment and Assumption Agreement, dated as of August 28, 1998,
              by and among G&G Shops, the subsidiaries of G&G Shops named
              therein, the subsidiaries of Petrie Retail named therein, PSL and
              G+G Retail.(1)

10.06         Employment Agreement, dated as of August 28, 1998, by and between
              G+G Retail and Jay Galin.(1)

10.07         Employment Agreement, dated as of August 28, 1998, by and between
              G+G Retail and Scott Galin.(1)

10.08         Letter Agreement, dated October 12, 1998, by and between G+G
              Retail and Michael Kaplan.(1)

10.09         Letter Agreement, dated October 12, 1998, by and between G+G
              Retail and Jeffrey Galin.(1)
</TABLE>





<PAGE>

<TABLE>
<S>           <C>
10.10         Amendment No. 1 to Employment Agreement, dated as of November 30,
              1998, by and between G+G Retail and Jay Galin.(1)

10.11         Amendment No. 1 to Employment Agreement, dated as of November 30,
              1998, by and between G+G Retail and Scott Galin.(1)

10.12         Bonus Plan for Senior Management Employees of G+G Retail,
              effective February 2, 1999.(1)

10.13         NCR Corporation Master Agreement, effective as of February 9,
              1999, between NCR Corporation and G+G Retail.(1)

10.14         Discount Addendum, effective as of February 26, 1999, between NCR
              Corporation and G+G Retail. Portions of this exhibit have been
              omitted pursuant to an order of confidential treatment granted by
              the Securities and Exchange Commission.(1)

10.15         G&G Retail Holdings, Inc. 1999 Stock Option Plan, effective as of
              March 15, 1999.(1)

10.16         Option Agreement, dated as of March 15, 1999, by and between G&G
              Retail Holdings and Jay Galin.(1)

10.17         Option Agreement, dated as of March 15, 1999, by and between G&G
              Retail Holdings and Scott Galin.(1)

10.18         Service Agreement, dated April 1, 1999, between G+G Retail and G&G
              Retail of Puerto Rico, Inc.(1)

10.19         Master Lease Purchase Agreement, dated as of May 4, 1999, by and
              between Chase Equipment Leasing, Inc. and G+G Retail.(1)

10.20         Addendum to Master Lease Purchase Agreement, effective as of May
              4, 1999, by and between Chase Equipment Leasing and G+G Retail.(1)

10.21         Form of Exchange Agent Agreement between U.S. Bank Trust National
              Association, as exchange agent, and G+G Retail.(1)

10.22         Letter agreement, dated January 18, 2000, amending Employment
              Agreement between G+G Retail and Scott Galin.(2)

10.23         Amendment No. 2 to Employment Agreement, dated as of August 8,
              2000, by and between Jay Galin and G+G Retail, Inc.(3)

10.24         Amendment No. 3 to Employment Agreement, dated as of January 22,
              2001, by and between G+G Retail, Inc. and Jay Galin.(4)

10.25         Amendment No. 3 to Employment Agreement, dated as of January 22,
              2001, by and between G+G Retail, Inc. and Scott Galin.(4)

10.26         Loan and Security Agreement between the CIT Group/Business Credit,
              Inc. and G+G Retail, Inc., dated as of May 2, 2001.(5)
</TABLE>





<PAGE>

<TABLE>
<S>           <C>
10.27         Amendment No. 4 to Employment Agreement, dated as of September 11,
              2002, by and between Jay Galin and G+G Retail, Inc.(6)

10.28         Amendment No. 4 to Employment Agreement, dated as of September 11,
              2002, by and between G+G Retail, Inc. and Jay Galin.(6)

10.29         Agreement, dated September 11, 2002 between G+G Retail and Pegasus
              Investors, L.P.(6)

21.01         Subsidiaries of G+G Retail, Inc.(1)

 99.1         Certifications pursuant to 18 U.S.C. Section 1350, as adopted
              pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
</TABLE>

----------
(1)  Incorporated by reference to the registration statement on Form S-4 (File
     no. 333-81307) filed by G+G Retail, Inc. on October 4, 1999.

(2)  Incorporated by reference to the annual report of Form 10-K filed by G+G
     Retail, Inc. on April 21, 2000.

(3)  Incorporated by reference to the quarterly report on Form 10-Q filed by G+G
     Retail, Inc. on September 12, 2000.

(4)  Incorporated by reference to the annual report of Form 10-K filed by G+G
     Retail, Inc. on May 4, 2001.

(5)  Incorporated by reference to the quarterly report on Form 10-Q filed by G+G
     Retail, Inc. on June 18, 2001.

(6)  Incorporated by reference to the quarterly report on Form 10-Q filed by G+G
     Retail, Inc. on December 16, 2002.




                          STATEMENT OF DIFFERENCES
                          ------------------------

 The section symbol shall be expressed as............................... 'SS'