FORM 10-K/A
                               AMENDMENT NO. 1
                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20549
(Mark One)

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

For the fiscal year ended February 1, 2003

                                      OR

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

For the transition period from ___________________ to ______________________

Commission file number 019774


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

       Delaware                                               51 0303670
       --------                                               ----------
State or other jurisdiction of                             (I.R.S. Employer
 incorporation or organization                            Identification No.)

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

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

Securities registered pursuant to Section 12(b) of the 1934 Act:

 Title of each class                 Name of each exchange on which registered
----------------------------         -----------------------------------------

Securities registered pursuant to Section 12(g) of the 1934 Act:


  Common Stock, $.001 par value per share, with Stock Purchase Right attached
  ---------------------------------------------------------------------------
                               (Title of class)





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

YES___X___        NO _______

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 Rule 12b-2 of the 1934 Act).

YES       NO  X
   -----    -----

On April 2, 2003, the aggregate market value of the voting and non-voting
common equity of the registrant (the "Corporation" also referred to herein,
together with its subsidiaries, as the "Company") held by non-affiliates of
the registrant was approximately $65.2 million computed by reference to the
$7.00 price at which the common equity was last sold as of August 2, 2002. For
purposes of the preceding sentence only, affiliate status was determined on
the basis that all stockholders of the registrant are non-affiliates except
the two non-institutional stockholders who have filed statements with the
Securities and Exchange Commission (the "SEC" or the "Commission") under
Section 16(a) of the 1934 Act reporting holdings of 10% or more of the shares
outstanding. The holdings of affiliates are based upon the contents of the
filed statements.

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the 1934 Act
subsequent to the distribution of securities under a plan confirmed by a
court.

YES _______                NO _______

APPLICABLE ONLY TO CORPORATE REGISTRANTS:

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

As of April 2, 2003 there were 12,937,304 shares of the registrant's common
stock, $.001 par value per share, outstanding. One Stock Purchase Right is
attached to each outstanding share.

INTRODUCTORY NOTE:

         This Amendment No. 1 on Form 10-K/A (this "Amendment") amends the
Company's Annual Report on Form 10-K for the fiscal year ended February 1,
2003 filed on April 3, 2003 (the "Original Filing").

         The Company is filing this Amendment in order to (a) amend the Report
of Independent Accountants as required by Generally Accepted Auditing
Standards to include a paragraph noting the Company's adoption, effective
February 3, 2002, of Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets," issued by the Financial Accounting
Standards Board ("SFAS 142") in July 2001 and (b) correcting typographical
errors in note 3 of the notes to the Consolidated Financial Statements, which
deals only with SFAS 142.

         Except for the additional paragraph, the Report of Independent
Accountants included in this Amendment has not changed in any respect from the
Report included in the Original Filing. The Company's Consolidated Financial
Statements included in this Amendment have not changed in any respect from the
Consolidated Financial Statements included in the Original Filing except with
respect to correcting typographical errors in note 3, which deals only with
SFAS 142.

         Exhibit No. 23.1 and Exhibit No. 99.1 to this Amendment are being
currently dated but are otherwise unchanged.




Item 8.  Financial Statements and Supplementary Data.

                   UNITED RETAIL GROUP, INC. AND SUBSIDIARIES
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


        Report of Independent Accountants
          (as amended August 12, 2003)

        Consolidated Balance Sheets as of February 2, 2002 and
          February 1, 2003

        Consolidated Statements of Operations for each of the three fiscal years
          in the period ended February 1, 2003

        Consolidated Statements of Cash Flows for each of the three fiscal
          years in the period ended February 1, 2003

        Consolidated Statements of Stockholders' Equity for each of the three
          fiscal years in the period ended February 1, 2003

        Notes to Consolidated Financial Statements


                   UNITED RETAIL GROUP, INC. AND SUBSIDIARIES
                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Stockholders of
UNITED RETAIL GROUP, INC.:


         In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, cash flows and stockholders'
equity present fairly, in all material respects, the financial position of
United Retail Group, Inc. and its subsidiaries (the "Company") at February 2,
2002 and February 1, 2003, and the results of their operations and their cash
flows for each of the three fiscal years in the period ended February 1, 2003,
in conformity with accounting principles generally accepted in the United
States of America. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

As discussed in Note 3 to the consolidated financial statements, effective
February 3, 2002, the Company adopted Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets".


/s/ PricewaterhouseCoopers LLP


New York, New York
February 14, 2003
<PAGE>

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

<table>
<caption>
                                                                  February 2,          February 1,
                                                                     2002                  2003
                                                                 ----------------  ----------------

                          ASSETS
Current assets:

                                                                      <c>             <c>
   Cash and cash equivalents                                             $27,812         $17,540
   Accounts receivable                                                     1,455           2,994
   Inventory                                                              61,793          61,569
   Prepaid rents                                                           4,860           4,972
   Other prepaid expenses                                                  2,589           2,290
                                                                 ----------------  --------------
      Total current assets                                                98,509          89,365

Property and equipment, net                                               89,191          87,720
Deferred charges and other intangible assets,
  net of accumulated amortization of $3,238
  and $325                                                                 6,232             557
Deferred income taxes                                                      1,184               -
Other assets                                                               2,166           1,667
                                                                 ----------------  --------------
    Total assets                                                        $197,282        $179,309
                                                                 ================  ==============

                         LIABILITIES
Current liabilities:
  Curent portion of distribution center financing                         $1,435          $1,220
  Current portion of capital leases                                        1,491           1,963
  Accounts payable and other                                              20,673          26,596
  Disbursement accounts                                                   12,290          11,922
  Accrued expenses                                                        20,339          22,023
  Deferred income taxes                                                      423               -
                                                                 ----------------  --------------
    Total current liabilities                                             56,651          63,724

Long-term distribution center financing                                    5,181           3,961
Long-term capital leases                                                   7,213           5,764
Other long-term liabilities                                                6,433           6,865
                                                                 ----------------  --------------
    Total liabilities                                                     75,478          80,314
                                                                 ----------------  --------------

Commitments and contingencies

                            STOCKHOLDERS' EQUITY

Preferred stock, $.001 par value; authorized
   1,000,000; none issued
Series A junior participating preferred stock,
   $.001 par value; authorized 150,000; none issued
Common stock, $.001 par value; authorized
   30,000,000; issued 14,236,000 and 14,248,200;
   outstanding 13,203,633 and 12,937,304                                      14              14
Additional paid-in capital                                                80,408          83,601
Retained earnings                                                         46,133          23,056
Treasury stock (1,032,367 and 1,310,896 shares), at cost                  (4,751)         (7,676)
                                                                 ----------------  --------------
    Total stockholders' equity                                           121,804          98,995
                                                                 ----------------  --------------
    Total liabilities and stockholders' equity                          $197,282        $179,309
                                                                 ================  ==============


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

</table>

<page>

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

<table>
<caption>

                                                            53 Weeks             52 Weeks            52 Weeks
                                                           Fiscal Year          Fiscal Year         Fiscal Year
                                                              Ended                Ended               Ended
                                                           February 3,          February 2,         February 1,
                                                              2001                 2002                2003
                                                        ------------------   ------------------  ------------------


                                                              <c>                  <c>                 <c>
Net sales                                                        $419,712             $427,040            $431,964

Cost of goods sold, including
  buying and occupancy costs                                      323,153              326,101             343,625
                                                        ------------------   ------------------  ------------------

   Gross profit                                                    96,559              100,939              88,339

General, administrative and
  store operating expenses                                         91,474              100,299             105,499

Goodwill impairment                                                     -                    -               5,611
                                                        ------------------   ------------------  ------------------

   Operating income (loss)                                          5,085                  640             (22,771)

Interest income (expense), net                                      1,854                  361                (827)
                                                        ------------------   ------------------  ------------------

  Income (loss) before income taxes                                 6,939                1,001             (23,598)

Provision for (benefit from) income taxes                           2,719                  571              (7,771)
Provision for the valuation allowance
  for the net deferred tax assets                                       -                    -               7,250
                                                        ------------------   ------------------  ------------------

   Net income (loss)                                               $4,220                 $430            ($23,077)
                                                        ==================   ==================  ==================

Earnings (loss) per share
  Basic                                                             $0.32                $0.03              ($1.77)
                                                        ==================   ==================  ==================
  Diluted                                                           $0.31                $0.03              ($1.77)
                                                        ==================   ==================  ==================

Weighted average number of
  shares outstanding
   Basic                                                       13,301,510           13,241,110          13,046,568
   Common stock equivalents
      (stock options)                                             213,213              200,773                   -
                                                        ------------------   ------------------  ------------------
   Diluted                                                     13,514,723           13,441,883          13,046,568
                                                        ==================   ==================  ==================



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

</table>

<page>


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

<table>
<caption>

                                                                          53 Weeks           52 Weeks            52 Weeks
                                                                        Fiscal Year        Fiscal Year         Fiscal Year
                                                                           Ended              Ended               Ended
                                                                        February 3,        February 2,         February 1,
                                                                            2001               2002                2003
                                                                        ---------------  -----------------   --------------

Cash Flows From Operating Activities:

                                                                          <c>                  <c>             <c>
    Net income (loss)                                                        $4,220               $430            ($23,077)
Adjustments to reconcile net income (loss) to net cash
  provided from operating activities:
    Depreciation and amortization of property and equipment                   9,202             10,975              12,381
    Amortization of deferred charges and other intangible assets                462                607                 576
    Goodwill impairment                                                           -                  -               5,611
    Loss on disposal of assets                                                  779                405                 503
    Compensation expense                                                        311                311                 311
    Provision for (benefit from) deferred income taxes                        1,452               (455)                761
    Deferred lease assumption revenue amortization                             (360)              (300)               (140)
    Tax benefit from exercise of stock options                                   16                  -                   -
Changes in operating assets and liabilities:
    Accounts receivable                                                      (1,427)             1,118              (1,539)
    Inventory                                                                (3,679)            (2,791)                224
    Accounts payable and accrued expenses                                     8,681             (1,929)              6,922
    Prepaid expenses                                                         (1,641)               (95)                187
    Income taxes payable                                                        (95)               311                 504
    Other assets and liabilities                                                160               (771)                419
                                                                        ------------  -----------------   -----------------
Net Cash Provided from Operating Activities                                  18,081              7,816               3,643
                                                                        ------------  -----------------   -----------------

Investing Activities:
    Capital expenditures                                                    (24,490)           (22,948)            (11,413)
    Proceeds from sale-leaseback transaction                                      -              8,249                   -
    Deferred payment for property and equipment                                (536)               101                 773
    Proceeds from sale of investment and lease                                  200                 28                   -
                                                                        ------------  -----------------   -----------------
Net Cash Used in Investing Activities                                       (24,826)           (14,570)            (10,640)
                                                                        ------------  -----------------   -----------------

Financing Activities:
    Issuance of loans to officers                                              (235)              (180)                (52)
    Treasury stock acquired                                                    (307)              (561)                  -
    Proceeds from exercise of stock options                                     164                 26                  49
    Repayments of long-term debt                                             (1,189)            (1,367)             (1,435)
    Payments on capital lease obligations                                         -               (115)             (1,797)
    Other                                                                      (130)               (18)                (40)
                                                                        ------------  -----------------   -----------------
Net Cash Used in Financing Activities                                        (1,697)            (2,215)             (3,275)
                                                                        ------------  -----------------   -----------------

Net decrease in cash and cash equivalents                                    (8,442)            (8,969)            (10,272)
Cash and cash equivalents, beginning of period                               45,223             36,781              27,812
                                                                        ------------  -----------------   -----------------
Cash and cash equivalents, end of period                                    $36,781            $27,812             $17,540
                                                                        ============  =================   =================



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

</table>

<page>


                  UNITED RETAIL GROUP, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                       (shares and dollars in thousands)

<table>
<caption>

                                  Common         Common
                                  Stock           Stock         Additional                      Treasury         Total
                                  Shares          $.001          Paid-in        Retained         Stock,       Stockholders'
                                Outstanding      Par Value       Capital        Earnings        at Cost         Equity


                               <c>           <c>             <c>             <c>            <c>             <c>
Balance, January 29, 2000          13,289             $14         $80,143         $41,483        ($3,883)       $117,757
                                 --------        --------        --------        --------       --------        --------

Exercise of stock options              41                             164                                            164
Treasury stock                        (61)                                                          (307)           (307)
Loans to officers                                                    (235)                                          (235)
Compensation expense                                                  311                                            311
Tax benefit from exercise
  of stock options                                                     16                                             16
Other                                                                (130)                                          (130)
Net income                                                                          4,220                          4,220
                                 --------        --------        --------        --------       --------        --------

Balance, February 3, 2001          13,269              14          80,269          45,703         (4,190)        121,796
                                 --------        --------        --------        --------       --------        --------

Exercise of stock options               5                              26                                             26
Treasury stock                        (70)                                                          (561)           (561)
Loans to officers                                                    (180)                                          (180)
Compensation expense                                                  311                                            311
Other                                                                 (18)                                           (18)
Net income                                                                            430                            430
                                 --------        --------        --------        --------       --------        --------

Balance, February 2, 2002          13,204              14          80,408          46,133         (4,751)        121,804
                                 --------        --------        --------        --------       --------        --------

Exercise of stock options              12                              49                                             49
Treasury stock                       (279)                                                        (2,925)         (2,925)
Loans to officers                                                   2,873                                          2,873
Compensation expense                                                  311                                            311
Other                                                                 (40)                                           (40)
Net income                                                                        (23,077)                       (23,077)
                                 --------        --------        --------        --------       --------        --------

Balance, February 1, 2003          12,937             $14         $83,601         $23,056        ($7,676)       $ 98,995
                                 ========        ========        ========        ========       ========        ========


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

</table>
<PAGE>
                  UNITED RETAIL GROUP, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Company Description and Basis of Presentation

United Retail Group, Inc. ("United Retail") is a specialty retailer of
large-size women's fashion apparel, footwear and accessories, featuring
AVENUE(R) brand merchandise, operating over 550 stores throughout the United
States.

The consolidated financial statements include the accounts of United Retail
and its subsidiaries (the "Company"). All significant intercompany balances
and transactions have been eliminated in consolidation.

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


2. Summary of Significant Accounting Policies

Fiscal Year

The Company's fiscal year ends on the Saturday closest to January 31. Fiscal
years are designated in the financial statements and notes by the calendar
year in which the fiscal year commences. Fiscal 2000 consisted of 53 weeks and
ended on February 3, 2001. Fiscal 2001 and fiscal 2002 consisted of 52 weeks
and ended on February 2, 2002 and February 1, 2003, respectively.

Net Revenues

Revenues include sales from all stores operating during the period, the
Company's catalog and website operations. Revenues are net of returns and
exclude sales tax. Revenue is recognized when title and risk of loss have
passed to the customer, which for stores is at the point of sale and for
catalog and internet sales is at the point of destination. The Company
recognizes sales upon redemption of gift certificates.

Shipping and Handling Costs

Shipping and handling revenue is included in net sales. Shipping and handling
costs are included in general, administrative and store operating expenses.
During fiscal 2000, fiscal 2001 and fiscal 2002, shipping and handling costs
were $1,354,000, $1,093,000 and $572,000, respectively.

Marketing Costs

The Company expenses marketing costs when the event occurs. Marketing expense,
included in cost of goods sold in the accompanying consolidated statements of
operations, was $16.0 million, $15.3 million, and $15.5 million in fiscal
2000, 2001, and 2002, respectively.

Earnings Per Share

Basic per share data has been computed based on the weighted average number of
shares of common stock outstanding. Earnings per diluted share includes the
weighted average effect of dilutive options on the weighted average shares
outstanding.

The computation of earnings per diluted share excludes options to purchase
458,572 shares and 845,072 shares in fiscal 2000 and 2001, respectively,
because the options' exercise prices were greater than the average market
price of the common shares. During fiscal 2002, 1,826,072 shares were excluded
from the computation of earnings per diluted share as a result of the
Company's net loss.

Cash and Cash Equivalents

The Company considers cash on hand, bank deposits, money market funds and
short-term investments with maturities of less than 90 days, when purchased,
as cash and cash equivalents. Cash and cash equivalents also include proceeds
from credit card sales prior to the end of the fiscal period that were
remitted as cash within five days after the end of such fiscal period.

Inventory

Inventory is stated at the lower of cost or market utilizing the retail
method. An average cost flow assumption is used.

Long-Lived Assets

Depreciation and amortization of property and equipment are computed for
financial reporting purposes on a straight-line basis, using service lives of
40 years for the distribution center building, the lesser of the useful life
or the life of the lease for leasehold improvements and furniture and
fixtures, 20 years for material handling equipment and 5 years for other
property. The cost of assets sold or retired and the related accumulated
depreciation or amortization are removed from the accounts with any resulting
gain or loss included in net income. Maintenance and repairs are charged to
expense as incurred. Betterments which extend service lives are capitalized.

The Company acquired certain trademarks during fiscal 2001 in the amount of
$12,000. These trademarks are being amortized over 15-year periods using the
straight-line method.

The Company continually evaluates whether events and circumstances have
occurred that indicate the remaining estimated useful life of long-lived
assets may warrant revision or that the remaining balance may not be
recoverable. When factors indicate that the asset should be evaluated for
possible impairment, the Company uses an estimate of the undiscounted net cash
flows over the remaining life of the asset in measuring whether the asset is
recoverable.

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentrations
of credit risk, are primarily cash equivalents. The Company places its cash
and cash equivalents in highly liquid investments with high quality financial
institutions.

Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The more significant
estimates and assumptions relate to inventory, insurance, useful lives of
assets and deferred tax assets.

Income Taxes

The Company provides for income taxes in accordance with SFAS No.109,
"Accounting for Income Taxes". This statement requires the use of the
liability method of accounting for income taxes. Under the liability method,
deferred taxes are determined based on the difference between the financial
reporting and tax bases of assets and liabilities using enacted tax rates in
effect in the years in which the differences are expected to reverse. Deferred
tax expense (benefit) represents the change in the deferred tax
asset/liability balance. The Company establishes valuation allowances against
deferred tax assets when sufficient negative evidence exists concerning the
realization of those deferred tax assets.

Stock Options

The Company has several stock option plans in operation which are more fully
described in Note 13. The Company uses the intrinsic value method to account
for stock-based compensation in accordance with Accounting Principles Board
Opinion No. 25, "Accounting For Stock Issued To Employees" ("Opinion No. 25")
and has adopted the disclosure provisions of Statement of Financial Accounting
Standards (SFAS) No. 123, "Accounting For Stock-Based Compensation" ("SFAS No.
123"). Under Opinion No. 25, compensation expense, if any, is measured as the
excess of the market price of the stock over the exercise price on the
measurement date. In May 1998, the stockholders ratified the issuance of
non-qualified stock options whose market price at the date of grant exceeded
the exercise price, which equaled the market price on the date of Board
action. In accordance with Opinion No. 25, compensation expense is recorded
ratably over the five-year vesting period of the options. All other stock
options were granted at the market price of the stock at the measurement date.


The following table illustrates the effect on net income (loss) and earnings
(loss) per share if the Company had applied the fair value recognition
provision under SFAS No. 123 to stock-based employee compensation:

<TABLE>
<CAPTION>
                                                                               (dollars in thousands except
                                                                                     per share data)
                                                                       Fiscal              Fiscal         Fiscal
                                                                        2000                2001           2002
                                                                   -------------------------------------------------

<S>                                                                    <C>                 <C>        <C>
Reported net income (loss)                                             $4,220              $430       ($23,077)
Add back: Compensation expense                                            311               311            311
Deduct: Total stock-based employee compensation
  expense determined under fair value based method
  for all awards, net of related tax effects                             (508)             (722)          (787)
                                                                       -------           -------       ---------

Pro forma net income (loss)                                            $4,023               $19       ($23,553)

Earnings (loss) per share:
  Basic - as reported                                                   $0.32             $0.03          ($1.77)
  Basic - pro forma                                                     $0.30             $0.00          ($1.81)

  Diluted - as reported                                                 $0.31             $0.03          ($1.77)
  Diluted - pro forma                                                   $0.30             $0.00          ($1.81)

For the pro forma information disclosed above, the fair value of each option
grant is estimated on the date of grant using the Black-Scholes option-pricing
model with the following assumptions:

                                                                       Fiscal              Fiscal         Fiscal
                                                                        2000                2001           2002
                                                                  -------------------------------------------------

              Expected dividend yield                                     0.00%               0.00%          0.00%
              Expected stock price volatility                            50.00%              50.00%         50.00%
              Risk-free interest rate                                     5.15%               4.59%          2.94%
              Expected life of options                                  5 years             5 years        5 years
</TABLE>

The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a
reliable single measure of the fair value of its employee stock options.


New Accounting Pronouncements

In July 2002, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 146, "Accounting for Costs Associated with Exit or Disposal Activities"
("SFAS No. 146"). SFAS No. 146 is effective for exit or disposal activities
that are initiated after December 31, 2002. This statement nullifies EITF No.
94-3, "Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." SFAS No. 146 requires that a liability for a cost associated
with an exit or disposal activity be recognized when the liability is
incurred. FASB Concept Statement No. 6, "Elements of Financial Statements"
defines when a liability is incurred. The Company has adopted the provisions
of this standard.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure" ("SFAS No. 148"), which amends SFAS
No. 123. SFAS No. 148 provides three transition methods for companies that
adopt SFAS No. 123's provisions for fair value recognition. In addition, SFAS
No. 148 requires that companies disclose for each period for which a statement
of operations is presented an accounting policy footnote that includes: i) the
method of accounting for stock options, ii) total stock compensation cost that
is recognized in the statement of operations and would have been recognized
had SFAS No. 123 been adopted for recognition purposes, and iii) pro forma net
income and earnings per share that would have been reported had SFAS No. 123
been adopted for recognition purposes. This statement requires that companies
having a year-end after December 15, 2002 follow the prescribed format and
provide the additional disclosures in their annual reports. The Company has
provided the disclosures required by SFAS No. 148 in these notes to the
financial statements. The Company does not currently intend to change its
method of accounting for stock options and does not expect the adoption of
this statement to have a material effect on its financial statements.


3. Goodwill

Effective February 3, 2002, the Company adopted the provisions of SFAS No. 142
"Goodwill and Other Intangible Assets", which required that goodwill be
subject to an impairment test. The Company's valuation at time of adoption,
which utilized a multiple of EBITDA (earnings before interest, taxes,
depreciation and amortization) as well as a comparison to the Company's
current market capitalization, indicated that no impairment existed. The
Company ceased amortization of goodwill in fiscal 2002. The Company conducted
a similar valuation in the fourth quarter of fiscal 2002 and on the basis of
both considerations concluded that the entire amount of goodwill, $5.6
million, was impaired. In addition to the aforementioned valuation
considerations, other compelling reasons for recording the impairment included
the significant losses incurred in the current year and the recent downward
trend in earnings.

The statement of operations adjusted to exclude amortization expense for
fiscal 2000 and 2001 related to goodwill are as follows (dollars in thousands
except per share data):

                                                    Fiscal             Fiscal
                                                     2000               2001
                                                 ------------------------------
Reported net income                                $4,220              $430
Add back: Goodwill amortization                       205               205

Pro forma net income                               $4,425              $635

Earnings per share:
  Basic - as reported                               $0.32             $0.03
  Basic - pro forma                                 $0.33             $0.05

  Diluted - as reported                             $0.31             $0.03
  Diluted - pro forma                               $0.33             $0.05


At February 3, 2001 and February 2, 2002, goodwill was $5.8 million and $5.6
million, respectively. The reduction in goodwill of $205 during fiscal 2001
represents the annual amortization.


4. Property and Equipment

Property and equipment, at cost, consists of (dollars in thousands):

                                               February 2,          February 1,
                                                  2002                  2003
                                             ----------------------------------
Land                                               $2,176               $2,176
Buildings                                          10,574               10,574
Furniture, fixtures and equipment                  88,307               92,820
Leasehold improvements                             48,266               50,887
Beneficial leaseholds                               5,082                4,884
Construction in progress                              696                  128
                                             ----------------------------------
                                                  155,101              161,469

Accumulated depreciation and
  amortization, including beneficial
  leaseholds of $4,872 and $4,774                 (65,910)             (73,749)
                                             ----------------------------------
Property and equipment, net                       $89,191              $87,720
                                             ==================================

Furniture, fixtures and equipment include approximately $8.2 million of assets
under capital leases arising under a sale and leaseback agreement (See Note 6).


5. Accrued Expenses

 Accrued expenses consist of (dollars in thousands):

                                             February 2,           February 1,
                                                2002                   2003
                                             -----------           -----------
Insurance payable                                $2,695               $4,465
Payroll related expenses                          2,940                3,393
Gift cards and other customer credits             2,795                3,242
Occupancy expenses                                3,391                2,557
Credit processing                                 1,431                1,496
Sales taxes payable                               1,237                1,301
Other                                             5,850                5,569
                                             -----------           -----------
                                                $20,339              $22,023
                                             ===========           ===========


6. Leased Facilities and Commitments

The Company leases its retail store locations, office facilities and certain
equipment under operating leases. Annual store rent is composed of a fixed
minimum amount, plus contingent rent based upon a percentage of sales
exceeding a stipulated amount. Store lease terms generally require additional
payments to the landlord covering taxes, maintenance and certain other
expenses.

Rent expense was as follows (dollars in thousands):

                                  Fiscal        Fiscal           Fiscal
                                   2000          2001              2002
                                 ----------------------------------------

   Fixed minimum                  $41,395        $45,924         $48,052
   Percentage                         121            103              48
Total real estate rent             41,516         46,027          48,100
Equipment and other                   393            414             596
                                 ----------------------------------------
Total rent expense                $41,909        $46,441          $48,696
                                 ========================================

At February 1, 2003, the Company was committed under store leases with initial
terms typically ranging from 1 to 15 years and with varying renewal options.
Many leases entered into by the Company include options that may extend the
lease term beyond the initial commitment period. Some leases also include
early termination options which can be exercised under specific conditions. At
February 3, 2001, February 2, 2002 and February 1, 2003, accrued rent expense
amounted to $6.5 million, $7.2 million and $7.2 million, respectively, of
which $6.0 million, $6.4 million and $6.9 million, respectively, is included
in "Other long-term liabilities".

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

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

The following is a schedule by year of approximate minimum lease payments
(dollars in thousands) under operating and capital leases:

                                                  Operating           Capital
                                                  ---------           -------
     2003                                           $43,742             $2,429
     2004                                            39,737              2,453
     2005                                            35,856              2,103
     2006                                            32,162              1,797
     2007                                            27,969                  -
     Thereafter                                     115,095                  -
                                                  ---------           --------
     Total minimum lease payments                  $294,561             $8,782
     Less: imputed interest                                             (1,055)
                                                                      --------
     Present value of minimum lease payments                            $7,727
                                                                      ========


7. Long-term Debt

Long-term distribution center financing consists of (dollars in thousands):

                                                 February 2,       February 1,
                                                     2002             2003
                                                 ------------------------------
  7.30% Note due 2003                                $1,536              $637
  8.64% Mortgage due 2009                             5,080             4,544
                                                 ------------------------------
  Total debt                                         $6,616            $5,181
  Less current maturities                             1,435             1,220
                                                 ------------------------------
  Long-term debt                                     $5,181            $3,961
                                                 ==============================

Principal maturities of long-term distribution center financing by year are as
follows (dollars in thousands):

                                                                     Debt
                                                                 Maturities
                                                                 ----------
        2003                                                        $1,220
        2004                                                           636
        2005                                                           693
        2006                                                           755
        2007                                                           823
        Thereafter                                                   1,054
                                                                    -------
        Total                                                       $5,181
                                                                    =======


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

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

The Company and certain of its subsidiaries (collectively, the "Companies")
are parties to a Financing Agreement, dated August 15, 1997, as amended (the
"Financing Agreement"), with The CIT Group/Business Credit, Inc. ("CIT"). The
Financing Agreement provides a revolving line of credit for a term ending
August 15, 2005 in the aggregate amount of $40 million for the Companies to
support trade letters of credit and standby letters of credit and to finance
loans which could be used for working capital and general corporate purposes.

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

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

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

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

At February 1, 2003, the combined availability of the Companies was $13.3
million, no balance was in the pledged account, the aggregate outstanding
amount of letters of credit arranged by CIT was $26.7 million and no loan had
been drawn down. The Company's cash and cash equivalents of $17.5 million was
unrestricted.


8. Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable and
trade payables approximate fair value because of the short-term maturity of
these items. The fair value of long-term debt (distribution center financing
and capital leases), including the current portion, is estimated to be $13.4
million for fiscal 2002 based on the current rates quoted to the Company for
debt of the same or similar issues.


9. Income Taxes

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

                                       Fiscal         Fiscal            Fiscal
                                        2000           2001              2002
                                    -------------------------------------------
   Current:
      Federal                            $977           $754          ($1,588)
      State                               290            272              306
                                    -------------------------------------------
                                        1,267          1,026          ($1,282)
                                    -------------------------------------------

   Deferred:
     Federal                            1,342           (374)            (500)
     State                                110            (81)           1,261
                                    -------------------------------------------
                                        1,452           (455)             761
                                    -------------------------------------------
Provision for (benefit from)
     income taxes                      $2,719           $571            ($521)
                                    -==========================================

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


                                       Fiscal         Fiscal          Fiscal
                                        2000           2001            2002
                                    -------------------------------------------
Statutory Federal income
     tax rate                            35.0%          35.0%          (35.0%)
State income taxes, net of
     Federal benefit                      5.4           12.4             0.5
Benefit from state net operating
     losses ("NOL's")                    (2.6)           0.0             0.0
Goodwill amortization                     1.1            7.2             0.0
Goodwill impairment                       0.0            0.0             8.3
Other                                     0.3            2.4             0.1
                                    -------------------------------------------
Sub-total                                39.2           57.0           (26.1)

Deferred tax valuation allowance          0.0            0.0            23.9
                                    -------------------------------------------
                                         39.2%          57.0%           (2.2%)
                                    ===========================================


Significant components of the Company's deferred tax assets and liabilities
are summarized below (dollars in thousands):

                                                 February 2,        February 1,
                                                   2002               2003
                                                 -----------        -----------
        Net long-term asset:
        Federal NOL                               $    -                $4,128
        Accruals and reserves                      2,911                 3,317
        State NOL's                                1,360                 2,974
        Compensation                                 444                   564
        Depreciation                              (3,531)               (3,139)
                                                 ------------------------------
                                                   1,184                 7,844
                                                 ------------------------------


        Net current liability:
        Prepaid rent                               1,861                 2,134
        Accruals and reserves                       (385)                 (428)
        Inventory                                 (1,053)               (1,112)
                                                 ------------------------------
                                                     423                   594
                                                 ------------------------------
        Valuation allowance                            -                (7,250)
                                                 ------------------------------

        Net deferred tax asset                      $761            $       -
                                                 ===============================


The Company recorded a $7.3 million non-cash charge to establish a valuation
allowance for its net deferred tax assets and net operating loss carryforwards
in the fourth quarter of fiscal 2002. The valuation allowance was calculated
in accordance with the provisions of SFAS No. 109, "Accounting for Income
Taxes" ("SFAS No. 109"), which places primary importance on the Company's
operating results in the most recent three-year period when assessing the need
for a valuation allowance. The Company's cumulative loss in the most recent
three-year period, including the net loss reported in the fourth quarter of
fiscal 2002, was sufficient to require a full valuation allowance under the
provisions of SFAS No. 109. The Company intends to maintain a valuation
allowance for its net deferred tax assets and net operating loss carryforwards
until sufficient positive evidence exists to support its reversal.


10. Related Party Transactions

The Company previously shared a store location with a subsidiary of Limited
Brands, Inc. ("The Limited") and was charged by The Limited for occupancy
costs through January 2001. These occupancy charges increased cost of goods
sold, including buying and occupancy costs, by $73,000 in fiscal 2000.

From fiscal 2000 through fiscal 2001, an affiliate of the Chairman of the
Board of the Company, American Licensing Group, L.P. ("ALGLP") (in which he
holds an 80% interest), provided management and administrative services to a
subsidiary of The Limited, American Licensing Group, Inc., for a base annual
fee and profit sharing fee, the profit sharing fee being the lower of
one-third of net profits or $150,000 per annum.

During fiscal 2000 and fiscal 2001, the Company incurred expenses under
certain Sublicensing Agreements with respect to trademarks to American
Licensing Group, Inc. in the amounts of $306,000 and $0, respectively, and to
ALGLP in the amounts of $181,000 and $12,000, respectively. American Licensing
Group, Inc. and ALGLP, in turn, incurred expenses with respect to the
trademarks under certain Licensing Agreements with the owner of the
trademarks. The Sublicensing Agreements between the Company and American
Licensing Group, Inc. and ALGLP, respectively, were terminated as of November
30, 2000.


11. Retirement Plan

The Company maintains a qualified defined contribution pension plan.
Generally, an employee is eligible to participate in the plan if the employee
has completed one year of full-time continuous service. The Company makes a
50% match of a portion of employee savings contributions.

The Company also maintains a non-qualified defined contribution pension plan.
The Company makes a 50% match of a portion of employee savings contributions
for those associates whose contributions to the qualified plan are limited by
IRS regulations, as well as retirement contributions for certain grandfathered
associates equal to 6% of those associates' compensation.

Pension costs for all benefits charged to income during fiscal 2000, fiscal
2001 and fiscal 2002 were approximately $338,000, $396,000 and $404,000,
respectively.


12. Stockholders' Equity

Coincident with the completion of its initial public offering on March 17,
1992, the Company's certificate of incorporation was amended to provide for
only one class of Common Stock, par value $.001 per share, with 30 million
shares authorized. The Company also authorized 1 million shares of Preferred
Stock, par value $.001 per share, to be issued from time to time, in one or
more classes or series, each such class or series to have such preferences,
voting powers, qualifications and special or relative rights and privileges as
shall be determined by the Board of Directors in a resolution or resolutions
providing for the issuance of such class or series of Preferred Stock.
Additionally, certain loan agreements, to which the Company is a party, impose
restrictions on the payment of dividends.

In September 1999, the Company adopted a Shareholder Rights Plan and
distributed rights as a dividend at the rate of one Right for each share of
Common Stock of the Company. The rights will expire on September 28, 2009.

Each Right initially entitles a shareholder to buy for $65 one one-hundredth
of a share of a series of preferred stock which is convertible to shares of
Common Stock. Among other things, the Rights will be exercisable, subject to
certain exceptions, if a person or group acquires beneficial ownership of 15%
or more of the Company's Common Stock or commences a tender or exchange offer
upon consummation of which such person or group would beneficially own 15% or
more of the Company's Common Stock. Until the Rights become exercisable, each
share of common stock of the Company has a Right attached and the securities
trade as a unit.


13. Stock Options

The Company has two stock option plans with options available to be granted.
Under these two plans, employees of the Company whose judgment, initiative and
efforts may be expected to contribute materially to the successful performance
of the Company are eligible to receive options. Non-employee Directors also
receive annual grants of options. The options granted vest beginning one year
from the date of grant, and vest fully after five years, subject to
acceleration under certain circumstances. The options granted expire ten years
after the date of grant. Options are granted, and the plans are administered,
by the Compensation Committee of the Board of Directors, composed of
non-employees of the Company. Other option plans are in operation with no
options available for grant.

A summary of stock option activity follows:

<TABLE>
<CAPTION>
                                                                                   Weighted
                                                              Number of            Average
Fiscal 2000                                                    Shares           Exercise Price
                                                            ------------------------------------
<S>                                                            <C>                   <C>
Options outstanding at beginning of period                     1,275,600             $6.61
Options granted                                                  151,500             $8.15
Options exercised                                                 40,200             $4.08
Options canceled                                                  57,828             $8.33
Options outstanding at end of period                           1,329,072             $6.79
Options available for grant at end of period                     204,500
Options exercisable at end of period                             671,072             $6.72

                                                                                  Weighted
                                                              Number of           Average
Fiscal 2001                                                    Shares           Exercise Price
                                                            ------------------------------------

Options outstanding at beginning of period                     1,329,072             $6.79
Options granted                                                  500,500             $8.71
Options exercised                                                  5,000             $5.23
Options canceled                                                 108,700             $5.62
Options outstanding at end of period                           1,715,872             $7.42
Options available for grant at end of period                     209,000
Options exercisable at end of period                             854,847             $6.66

                                                                                  Weighted
                                                              Number of            Average
Fiscal 2002                                                    Shares           Exercise Price
                                                            ------------------------------------

Options outstanding at beginning of period                     1,715,872             $7.42
Options granted                                                  168,200             $6.73
Options exercised                                                 12,200             $4.00
Options canceled                                                  45,800             $7.75
Options outstanding at end of period                           1,826,072             $7.37
Options available for grant at end of period                      82,000
Options exercisable at end of period                           1,093,622             $6.93

</TABLE>


A summary of stock options outstanding at year-end fiscal 2002 is as follows:

<TABLE>
<CAPTION>

                                     Options Outstanding                            Options Exercisable
-------------------------------------------------------------------------     ----------------------------------
                                             Weighted
                                              Average
                                            Remaining          Average                            Weighted
   Range of                   Number         Contractual       Exercise          Number           Average
Exercise Prices            Outstanding         Life            Price           Exercisable       Exercise Price
---------------            -----------      ------------       --------        -----------       --------------
<C>       <C>                   <C>               <C>            <C>               <C>              <C>
$  3.13 - $  3.25               77,300            4.2            $3.19             77,300           $3.19
$  4.13 - $  5.88              463,300            5.2            $5.24            327,800           $5.18
$  6.25 - $  8.80              752,472            5.3            $7.28            507,122           $7.34
$  9.13 - $ 12.08              512,000            7.7            $9.76            167,600          $10.13
$ 15.13 - $ 15.13               21,000            6.3           $15.13             13,800          $15.13
-------------------------------------------------------------------------      ----------------------------------
$  3.13 - $15.13             1,826,072            5.9            $7.37          1,093,622           $6.93

</TABLE>

Certain outstanding options were authorized directly by the Company's
stockholders but most were issued in accordance with stock option plans
authorized by them and administered by the Compensation Committee of the Board
of Directors.


14.  Advances To Officers

Advances were made by the Company in February 1998, February 1999 and November
1999 to Raphael Benaroya, the Company's Chairman of the Board, President and
Chief Executive Officer. The purpose of the advances was to finance payment of
income taxes incurred in connection with the exercise of stock options,
totaling approximately $2.3 million. On November 30, 2001, Mr. Benaroya signed
a consolidated promissory note in the amount of approximately $2.8 million,
representing the cumulative advances and accrued interest as of that date,
with a term of two years. Mr. Benaroya repaid the note with accrued interest
as of July 1, 2002 by surrendering 278,529 shares of Company common stock. The
surrendered shares had a value equivalent to the consolidated note based on
the closing price on the NASDAQ Stock Market on the preceding trading day. The
Compensation Committee of the Board of Directors, which administers the stock
option program, met on the morning of July 1, 2002 and approved the
transaction.


15. Stock Appreciation Rights Plan

In May 2000, May 2001 and May 2002, each nonmanagement Director received
annual awards under the Company's Stock Appreciation Rights Plan that provides
for a cash payment by the Company when the Director exercises the stock option
granted to him under the Company's Stock Option Plans in May 2000, May 2001 or
May 2002, as the case may be. The payment will be an amount equivalent to the
after tax equity in the option that is being exercised, that is, the excess of
the then current market price of the shares issued over the sum of the
exercise price of the corresponding option plus any personal income tax
withholding on the gain arising from the exercise.


16. Supplemental Cash Flow Information

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

                                             Fiscal        Fiscal       Fiscal
                                              2000          2001         2002
                                        ---------------------------------------
Interest income (expense), net
    per statements of income                 $1,854         $361         ($827)

Non-cash interest expense (income)              122         (259)           40
Net cash interest income (expense),
    including interest income
    of $2,638, $920 and $339                 $1,976         $102         ($787)
                                        =======================================
Income taxes paid (refunded)                 $1,346         $715       ($1,786)
                                        =======================================


Investing activities includes $8.8 million related to capital lease
obligations incurred during fiscal 2001.

Non-cash investing activities include $1.4 million related to capital lease
obligations incurred between January 2002 and January 2003.

Non-cash financing activities include the repayment of officer advances with
accrued interest as of July 1, 2002 with the repayment made by surrendering
278,529 shares of Company common stock with a market value equal to the
principal and interest, in lieu of cash payment.


17. Segment Information

The Company operated its business in two reportable segments split by channels
of distribution: Avenue Retail (retail stores) and Shop @ Home (internet and
catalog). In deciding how to allocate resources and assess performance, the
Company regularly evaluated the performance of its operating segments on the
basis of net sales and earnings (losses) from operations.

Certain information relating to the Company's reportable operating segments is
set forth below (dollars in thousands):
                                                    Fiscal           Fiscal
                                                     2001             2002
                                                   --------          --------
Net sales:
        Avenue Retail                              $415,553          $423,816
        Shop @ Home                                  11,487             8,148
                                                   --------          --------

                                                   $427,040          $431,964
                                                   ========          ========

Earnings (loss) from operations (1):
        Avenue Retail                               $16,987             ($864)
        Shop @ Home                                  (6,856)           (5,901)
                                                     ------            ------

                                                    $10,131           ($6,765)
                                                    =======           =======

(1) Represents earnings (loss) from operations before unallocated corporate
expenses and net interest income (expense).

The Company evaluates the performance of its assets on a consolidated basis.
Therefore, separate financial information for the Company's assets on a
segment basis is not available.

The following table sets forth a reconciliation of the reportable segments'
earnings (loss) from operations to the Company's consolidated income (loss)
before income taxes (dollars in thousands):

                                                    Fiscal             Fiscal
                                                     2001               2002
                                                  --------            ---------
Earnings (loss) from operations
   for reportable segments                         $10,131             ($6,765)

Unallocated corporate expenses                      (9,491)            (16,006)

Interest income (expense), net                         361                (827)
                                                   -------            ---------

Income (loss) before income taxes                   $1,001            ($23,598)
                                                   =======            =========


18.  Contingencies

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


19.    Supplemental Financial Data (Unaudited) (dollars in thousands, except
       per share data)

<TABLE>
<CAPTION>
                                                                        Fiscal 2001
                                             ------------------------------------------------------------
                                                  Qtr 1           Qtr 2          Qtr 3         Qtr 4
                                             ------------------------------------------------------------
<S>                                             <C>              <C>             <C>          <C>
Net sales                                       $108,877         $107,272        $96,641      $114,250
Gross profit                                      28,362           25,190         20,783        26,604
Operating income (loss)                            4,803              127         (3,540)         (750)
Net income (loss)                                 $3,133             $207        ($2,286)        ($624)
Net income (loss) per common share:
    Basic                                          $0.24            $0.02         ($0.17)       ($0.05)
    Diluted                                        $0.23            $0.02         ($0.17)       ($0.05)


                                                                        Fiscal 2002
                                             ------------------------------------------------------------
                                                  Qtr 1           Qtr 2          Qtr 3         Qtr 4
                                             ------------------------------------------------------------

Net sales                                       $115,574         $113,674        $97,019      $105,697
Gross profit                                      30,785           21,065         17,326        19,163
Operating income (loss)                            4,772           (7,077)        (7,687)      (12,779)
Net income (loss)                                 $2,876          ($4,639)       ($5,232)     ($16,082)
Net income (loss) per common share:
    Basic                                          $0.22           ($0.35)        ($0.40)       ($1.24)
    Diluted                                        $0.21           ($0.35)        ($0.40)       ($1.24)
</TABLE>


20.  Subsequent Events

In February 2003, the Company announced its intention to suspend catalog
operations in the first quarter of fiscal 2003 and operate the avenue.com
website as a virtual store utilizing the same assortments as the retail
stores.

<PAGE>


                                  SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this amendment to this
Form 10-K to be signed on its behalf by the undersigned, thereunto duly
authorized.

(Registrant)                                 UNITED RETAIL GROUP, INC.


Date: August 12, 2003                        By: /s/ Raphael Benaroya
                                                 -----------------------------
                                                 Raphael Benaroya, Chairman of
                                                 the Board, President and
                                                 Chief Executive Officer


<PAGE>


                                CERTIFICATIONS
                                --------------

         I, Raphael Benaroya, Chief Executive Officer of United Retail Group,
Inc., certify that:

         1.      I have reviewed this annual report on Form 10-K of United
                 Retail Group, 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 officer 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 we 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 officer and I have
                 disclosed, based on our most recent evaluation, to the
                 registrant's auditors and the audit committee of the
                 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 officer 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.


Date:  August 12, 2003                             /s/ Raphael Benaroya
                                                   --------------------------
                                                   Chief Executive Officer


         I, George R. Remeta, Chief Administrative Officer and Chief Financial
Officer of United Retail Group, Inc., certify that:

         1.      I have reviewed this annual report on Form 10-K of United
                 Retail Group, 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 officer 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 we 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 officer and I have
                 disclosed, based on our most recent evaluation, to the
                 registrant's auditors and the audit committee of the
                 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 officer 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.


Date:  August 12, 2003                            /s/ George R. Remeta
                                                  ----------------------------
                                                  Chief Financial Officer

<PAGE>


EXHIBIT INDEX

         The following exhibits are filed herewith:

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

            3                 Restated By-laws of the Corporation (filed on
                              April 3, 2003)
            10.1              Amendment, dated January 31, 2003, to Financing
                              Agreement among the Corporation, United Retail
                              Incorporated, Cloudwalkers, Inc. and The CIT
                              Group/Business Credit, Inc., as Agent and Lender
                              ("CIT") (filed on April 3, 2003)
            10.2              Amendment to Restated Supplemental Retirement
                              Savings Plan (filed on April 3, 2003)
            23.1              Consent of Independent Accountants for the
                              Corporation
            99.1              Certification pursuant to Section 906

           The following exhibits to the Corporation's Quarterly Report on
Form 10-Q for the period ended November 2, 2002, are incorporated herein by
reference:

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

            10.1*             Amendment, dated December 6, 2002, to Employment
                              Agreement, dated November 20, 1998 between the
                              Corporation and Raphael Benaroya ("Benaroya
                              Employment Agreement")
            10.2*             Amendment, dated December 6, 2002, to Employment
                              Agreement, dated November 20, 1998, between the
                              Corporation and George R. Remeta ("Remeta
                              Employment Agreement")
            10.3*             Amendment, dated December 6, 2002, to Employment
                              Agreement, dated November 20, 1998, between the
                              Corporation and Kenneth P. Carroll ("Carroll
                              Employment Agreement")

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

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

            10.1              Amendment, dated August 2, 2002, to Financing
                              Agreement among the Corporation, United Retail
                              Incorporated, Cloudwalkers, Inc. and CIT
            10.2              Amendment to Restated Supplemental Retirement
                              Savings Plan
            10.3              Purchase and Sale Agreement, dated as of July 1,
                              2002, between Raphael Benaroya and the
                              Corporation


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

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

            10.1*             Amendment, dated May 30, 2002, to Benaroya
                              Employment Agreement

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

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

            10.1              Amendment, dated April 5, 2002, to Private Label
                              Credit Card Program Agreement, dated January 27,
                              1998, between the Corporation, United Retail
                              Incorporated and World Financial Network
                              National Bank ("Private Label Credit Card
                              Program Agreement")
            10.2              Amendment, dated December 29, 1999, to Private
                              Label Credit Card Program Agreement
            10.3              Amendment, dated August 19, 1999, to Private
                              Label Credit Card Program Agreement
            10.4*             Letter, dated March 1, 2002, from the
                              Corporation to Raphael Benaroya with respect to
                              the cost of living adjustment under the Benaroya
                              Employment Agreement

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

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

            10.1*             Amendment, dated November 29, 2001, to Benaroya
                              Employment Agreement
            10.2*             Amendment, dated November 29, 2001, to Remeta
                              Employment Agreement
            10.3*             Amendment, dated November 29, 2001, to Carroll
                              Employment Agreement
            10.4*             Summary Plan Description for United Retail
                              Group, Inc. Incentive Compensation Program for
                              Executives
            10.5              Amendment, dated October 1, 2001, to Private
                              Label Credit Card Program Agreement
                              (Confidential portions filed separately with the
                              Secretary of the Commission)
            10.6*             Promissory note, dated November 30, 2001, from
                              Raphael Benaroya to the Corporation (paid as of
                              July 1, 2002)

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

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

            10.1*             Restated Stock Appreciation Rights Plan

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

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

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

            10                Amendment, dated August 21, 2000, to Financing
                              Agreement among the Corporation, United Retail
                              Incorporated, Cloudwalkers, Inc. and CIT

The following exhibits to the Corporation's Quarterly Report on Form 10-Q for
the period ended October 28, 2000 are incorporated herein by reference:

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

            10.1*             Amendment, dated August 18, 2000, to Benaroya
                              Employment Agreement
            10.2*             Amendment, dated August 18, 2000, to Carroll
                              Employment Agreement

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

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

            10.2              Amendment, dated December 28, 1999, to Financing
                              Agreement among the Corporation, United Retail
                              Incorporated and CIT ("Financing Agreement")
            10.3              Amendment, dated January 31, 2000, to Financing
                              Agreement among the Corporation, United Retail
                              Incorporated, Cloudwalkers, Inc. and CIT

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

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

            10.1              Amendment, dated October 6, 1999, to Financing
                              Agreement

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

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

            3                 Certificate of Designation, Preferences and
                              Rights of Series A Junior Participating
                              Preferred Stock

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

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

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

            10.1              Amendment, dated March 29, 1999, to Financing
                              Agreement
            21                Subsidiaries of the Corporation

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

         The following exhibits to the Corporation's Quarterly Report on Form
10-Q for the period ended October 31, 1998 are incorporated herein by
reference:

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

          10.1*               Benaroya Employment Agreement
          10.2*               Remeta Employment Agreement
          10.3*               Carroll Employment Agreement

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

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

            10.1*             1998 Stock Option Agreement, dated May 21, 1998,
                              between the Corporation and Raphael Benaroya
            10.2*             1998 Stock Option Agreement, dated May 21, 1998,
                              between the Corporation and George R. Remeta

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

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

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

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

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

            10.1              Amendment, dated September 15, 1997, to
                              Financing Agreement

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

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

            10.1              Financing Agreement
            10.2*             Amendment to Restated Supplemental Retirement
                              Savings Plan

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

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

            10.1*             Restated Supplemental Retirement Savings Plan

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

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

            3.1               Amended and Restated Certificate of
                              Incorporation of the Corporation

            4.1               Specimen Certificate for Common Stock of the
                              Corporation

            10.2.1            Software License Agreement, dated as of April
                              30, 1989, between The Limited Stores, Inc. and
                              Sizes Unlimited, Inc. (now known as United
                              Retail Incorporated) ("Software License")

            10.2.2            Amendment, dated December 10, 1991, to Software
                              License

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