EXHIBIT 10.3

                              AMENDMENT AGREEMENT


                                                              January 31, 2000


United Retail Group, Inc.
United Retail Incorporated
365 West Passaic Street
Rochelle Park, NJ 07662

Gentlemen:

We refer to (1) the Financing Agreement dated August 15, 1997 by and among
United Retail Group, Inc. ("URGI"), United Retail Incorporated ("URI") The
CIT Group/Business Credit, Inc. as Agent and Lender ("CITBC")and FirsTrust
Bank as Lender, as amended (the "Financing Agreement"), (2) the Guaranty
dated August 15, 1997 executed by URGI and URI in favor of the Agent and
the Lenders, as amended ("Borrower Guaranty"), and (3) the Pledge and
Security Agreement executed by URGI in favor of CITBC, as amended (the
"Collateral Pledge"). Capitalized terms used herein and defined in the
Financing Agreement shall have the meanings set forth in said Financing
Agreement unless otherwise specifically defined herein.

URGI has advised CITBC that it has formed a wholly owned indirect
subsidiary named Cloudwalkers, Inc. ("Cloudwalkers") and has requested that
CITBC extend Revolving Loans to Cloudwalkers and/or assist Cloudwalkers in
opening Letters of Credit under the Financing Agreement on the same terms
as Revolving Loans and Letters of Credit are made available to the
Companies thereunder.

Subject to and in accordance with the terms, provisions and conditions
hereof, the Agent and the Lenders have agreed to extend such Revolving
Loans and Letters of Credit to Cloudwalkers. In furtherance thereof, the
Financing Agreement shall be, and hereby is, amended as follows:

      (1)   Effective immediately, the term "Companies" as used in the
            Financing Agreement shall also include without limitation
            Cloudwalkers. Cloudwalkers by its signature below hereby
            adopts, ratifies, confirms, agrees to be bound by and comply
            with all of the terms, provisions and conditions of the
            Financing Agreement as if Cloudwalkers had been an original
            signatory thereto;

      (2)   CITBC specifically confirms its agreement to: (a) make
            Revolving Loans to Cloudwalkers subject to and in accordance
            with all of the terms, provisions, conditions and limitations
            of Section 3, Paragraph 1 of the Financing Agreement; and (b)
            assist Cloudwalkers in opening Letters of Credit subject to and
            in accordance with all of the terms, provisions, conditions and
            limitations of Section 4, Paragraph 1 of the Financing
            Agreement.

      (3)   Cloudwalkers specifically confirms:

            (a)   its grant to the Agent for the benefit of the Lenders of
                  a lien upon and security interest in all of Cloudwalkers
                  now owned and hereafter acquired Collateral, including
                  but not limited to, all Inventory, Accounts, Documents of
                  Title, and Other Collateral, all in accordance with the
                  terms and provisions of Section 5 of the Financing
                  Agreement;

            (b)   its agreement to be bound by and comply with each of the
                  representations, warranties and covenants contained in
                  Section 6 of the Financing Agreement;

            (c)   its agreement to pay interest on its Obligations under
                  the Financing Agreement at the rate set forth in Section
                  7 of the Financing Agreement, and further confirms its
                  agreement to pay all other fees and/or expenses as more
                  fully described in said Section;

            (d)   its agreement to grant to the Agent for the benefit of the
                  Lenders all of the powers set forth in Section 8 of the
                  Financing Agreement;

            (e)   its agreement to grant to the Agent for the benefit of
                  the Lenders all of the rights and remedies enumerated
                  under Sections 9 and 10 of the Financing Agreement; and

            (f)   its agreement to the various provisions and waivers more
                  fully set forth in Section 11 of the Financing Agreement.

      (4)   It is further agreed that:

            (a)   The term "Obligations" as used in the Financing Agreement
                  shall also include, without limitation, all indebtedness,
                  liabilities and obligations of Cloudwalkers to the Agent
                  and the Lenders.

            (b)   All Obligations of Cloudwalkers shall be and hereby are
                  secured by a lien upon and security interest in all
                  Collateral (as defined in the Financing Agreement).

            (c)   The extension of Revolving Loans and/or Letters of Credit
                  to Cloudwalkers shall be conditioned upon:

                  (i)   Cloudwalkers signing below to confirm that
                        Cloudwalkers shall be, and hereby is, added as a
                        signatory to the Borrower Guaranty, and that all
                        references therein to "Companies" and/or "the
                        undersigned" shall also include Cloudwalkers. By
                        its signature below Cloudwalkers specifically
                        adopts, ratifies and confirms the Borrower Guaranty
                        in all respects as if Cloudwalkers had been an original
                        signatory thereto and further confirms its guaranty of
                        payment of the Obligations of and URI and URGI to the
                        Agent and the Lenders, all in accordance with the terms
                        and provisions of said Borrower Guaranty.

                  (ii)  URGI and URI signing below to confirm that the term
                        "Obligations" as defined in the Borrower Guaranty
                        shall also include without limitation all
                        indebtedness, liabilities and obligations of
                        Cloudwalkers to the Agent and the Lenders.

                  (iii) URGI signing below to confirm that the term
                        "Secured Obligations" as used in the Collateral
                        Pledge and any other pledge and/or security
                        agreements executed by URGI in favor of the Agent
                        and the Lenders shall also include, without
                        limitation, all indebtedness, liabilities and
                        obligations of Cloudwalkers to the Agent and the
                        Lenders.

                  (iv)  The Agent shall have received tax, judgment and
                        Uniform Commercial Code searches satisfactory to
                        the Agent for all locations presently occupied or
                        used by Cloudwalkers.

                  (v)   Cloudwalkers shall have delivered to the Agent
                        evidence satisfactory to the Agent that casualty
                        insurance policies listing the Agent as loss payee
                        or mortgagee, as the case may be, with respect to
                        the Collateral of Cloudwalkers are in full force
                        and effect, all as set forth in Section 6,
                        Paragraph 5 of the Financing Agreement.

                  (vi)  Any documents (including without limitation,
                        financing statements) required to be filed in order
                        to create, in favor of the Agent for the benefit of
                        the Lenders a first and exclusive perfected
                        security interest in the Collateral of Cloudwalkers
                        (subject only to Permitted Encumbrances) with
                        respect to which a security interest may be
                        perfected by a filing under the U.C.C. shall been
                        properly filed in each office in each jurisdiction
                        required in order to create in favor of the Agent
                        for the benefit of the Lenders a perfected lien on
                        the Collateral of Cloudwalkers. The Agent shall
                        have received acknowledgment copies of all such
                        filings (or, in lieu thereof, the Agent shall have
                        received other evidence satisfactory to the Agent
                        that all such filings have been made); and the
                        Agent shall have received evidence that all
                        necessary filing fees and all taxes or other
                        expenses related to such filings have been paid in
                        full.

                  (vii) The Agent shall have received a copy of the resolutions
                        of Cloudwalkers authorizing the execution, delivery an
                        performance of (x) this Amendment Agreement, and (y)
                        any related agreements, certified by the Secretary or
                        Assistant Secretary of Cloudwalkers as of the date
                        hereof, together with a certificate of the
                        Secretary or Assistant Secretary of Cloudwalkers as
                        to the incumbency and signature of the officers of
                        Cloudwalkers executing such agreements and
                        certificate or other documents to be delivered by
                        them pursuant hereto, together with evidence of the
                        incumbency of such Secretary or Assistant
                        Secretary.

                 (viii) The Agent shall have received (x) a copy of the
                        Articles of Organization of Cloudwalkers certified
                        by the Secretary of State of its organization, and
                        (y) a copy of the Bylaws (as amended through the
                        date hereof) of Cloudwalkers certified by its
                        Secretary or Assistant Secretary.

                  (ix)  The Agent shall have received an executed Officer's
                        Certificate of the Companies satisfactory in form
                        and substance to the Agent, certifying that (i) the
                        representations and warranties contained herein are
                        true and correct in all material respects on and as
                        of the date hereof; (ii) the Companies are in
                        compliance with all of the terms and provisions set
                        forth herein; and (iii) no Default or Event of
                        Default has occurred.

                  (x)   No Default, Event of Default or material adverse
                        change in the financial condition, business,
                        prospects, profits, operations or assets of
                        Cloudwalkers or the other Companies shall have
                        occurred.

                  (xi)  The Agent shall have completed to the satisfaction
                        of the Agent an examination and verification of the
                        Accounts, Inventory, books and records of
                        Cloudwalkers.

                  (xii) Cloudwalkers shall have executed and delivered to
                        the Agent a Revolving Loan Promissory Note.

                 (xiii) All parties to the Amended and Restated Letter of
                        Credit Agreement shall have executed an amendment
                        and consent to the inclusion of Cloudwalkers
                        thereunder.

                  (xiv) The Agent shall have received an opinion of counsel
                        to Cloudwalkers, and the other Companies (in form
                        and substance satisfactory to the Agent) opining,
                        inter alia, that, subject to the i) filing,
                        priority and remedies provisions of the Uniform
                        Commercial Code, ii) the provisions of the
                        Bankruptcy Code, insolvency statutes or other like
                        laws, iii) the equity powers of a court of law and
                        iv) such other matters as may be agreed upon with
                        the Agent; (A)(a) this Amendment to Financing
                        Agreement, and (b) all other loan documents of
                        Cloudwalkers and the Companies are x) valid,
                        binding and enforceable according to their terms,
                        y) are duly authorized and z) do not violate any
                        terms, provisions, representations or covenants in
                        the articles of organization, charter or by-laws of
                        Cloudwalkers and the Companies or, to the best
                        knowledge of such counsel, of any loan agreement,
                        mortgage, deed of trust, note, security or pledge
                        agreement or indenture to which Cloudwalkers or the
                        Companies is a signatory or by which they or their
                        assets are bound.

Except as set forth herein no other waiver of or change in the terms or
provisions of the Financing Agreement, Borrower Guaranty, or the Collateral
Pledge is intended or implied. If the foregoing is in accordance with your
understanding of our agreement, kindly so indicate by signing and returning
the enclosed copy of this letter.

                                 Very truly yours,

                                 THE CIT GROUP/BUSINESS CREDIT, INC., as
                                 Agent and Lender

                                 By: /s/  Karen Hoffman
                                     ---------------------------------------
                                 Title: Vice President

                                 FIRSTRUST BANK, as Lender

                                 By: /s/  Kent Nelson
                                     ---------------------------------------
                                 Title: Vice President


Read and Agreed to:

UNITED RETAIL GROUP, INC.

By:  /s/ Jon Grossman
   ------------------------------
Title:  Vice President - Finance


UNITED RETAIL INCORPORATED

By: /s/ Kenneth P. Carroll
   ------------------------------
Title: President


CLOUDWALKERS, INC.

By:  /s/ George R. Remeta
   ------------------------------
Title: President