<PAGE>

                                  [LETTERHEAD]

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Board of Directors of
United Retail Group, Inc. and the
Plan Administrator of the United
Retail Group Retirement Savings Plan:


        We have audited the accompanying statements of net assets available for
benefits of the United Retail Group Retirement Savings Plan as of December 31,
1998 and 1997, and the related statements of changes in net assets available for
benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

        We conducted our audits in accordance with generally accepted auditing
stan dards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for benefits of the
Plan as of December 31, 1998 and 1997, and the changes in net assets available
for benefits for the years then ended, in conformity with generally accepted
accounting principles.

        Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules of
investments held for investment purposes, loans or fixed income obligations, and
reportable transactions are presented for the purpose of additional analysis and
are not a required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental schedules have been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.


                                             /s/ Ary, Earman and Roepcke
                                             ---------------------------
                                                Ary, Earman and Roepcke



Columbus, Ohio,
February 24, 1999.


<PAGE>
                   UNITED RETAIL GROUP RETIREMENT SAVINGS PLAN

                 STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS

                                DECEMBER 31, 1998
<TABLE>
<CAPTION>
                                                  Company        Balanced     Fixed        Equity         Aggressive      Int'l    
                                        Total    Stock Fund        Fund       Fund          Fund             Fund         Fund     
                                        -----    ----------      --------     -----        ------         ----------      -----    
<S>                                  <C>        <C>            <C>          <C>          <C>            <C>             <C>
ASSETS                                                                                                                             
                                                                                                                                   
Investments, at Fair Value:                                                                                                        
 Common Stock:                                                                                                                     
  United Retail Group, Inc.          $  948,967  $  948,967     $     -      $     -      $     -        $     -        $     -    
  Other                                   7,062        -              -            -            -              -              -    
 Shares of Registered Investment                                                                                                   
  Companies:                                                                                                                       
   Scudder Balanced Fund              2,003,077        -         2,003,077         -             -             -              -    
   Scudder Cash Investment Trust      2,008,561        -              -       2,008,561          -             -              -    
   Scudder Growth and Income Fund     2,023,589        -              -            -        2,023,589          -              -    
   Franklin Small Cap Growth Fund       705,645        -              -            -             -          705,645           -    
   Warburg Pincus International                                                                                                    
    Equity                              337,051        -              -            -             -             -           337,051 
   Other                                275,655       1,684           -            -             -             -              -    
Participant Loans                       336,038        -              -            -             -             -              -    
                                     ----------  ----------     ----------   ----------   -----------    ----------     ---------- 
       Total Investments              8,645,645     950,651      2,003,077    2,008,561     2,023,589       705,645        337,051 
                                                                                                                                   
Cash                                      1,888         835           -            -             -             -             1,053 
                                     ----------  ----------     ----------   ----------   -----------    ----------     ---------- 
       Total Assets                   8,647,533     951,486      2,003,077    2,008,561     2,023,589       705,645        338,104 
                                     ----------  ----------     ----------   ----------   -----------    ----------     ---------- 
LIABILITIES                                                                                                                        
                                                                                                                                   
Due to Brokers                            1,883         830           -            -             -             -             1,053 
Administrative Fees Payable               5,732         140          1,585        3,364           627             8              8 
                                     ----------  ----------     ----------   ----------   -----------    ----------     ---------- 
       Total Liabilities                  7,615         970          1,585        3,364           627             8          1,061 
                                     ----------  ----------     ----------   ----------   -----------    ----------     ---------- 
NET ASSETS AVAILABLE FOR BENEFITS    $8,639,918  $  950,516     $2,001,492   $2,005,197   $ 2,022,962    $  705,637     $  337,043 
                                     ==========  ==========     ==========   ==========   ===========    ==========     ==========
                                             
                                         
                                           Self Directed                   
                                             Brokerage         Loan      
                                           Account/Other       Fund      
                                           -------------       ----      
ASSETS                                                                  
                                                                        
Investments, at Fair Value:                                             
 Common Stock:                                                          
  United Retail Group, Inc.                  $     -         $     -    
  Other                                           7,062            -    
 Shares of Registered Investment                                        
  Companies:                                                            
   Scudder Balanced Fund                           -               -    
   Scudder Cash Investment Trust                   -               -    
   Scudder Growth and Income Fund                  -               -    
   Franklin Small Cap Growth Fund                  -               -    
   Warburg Pincus International                                         
    Equity                                         -               -    
   Other                                        273,971            -    
Participant Loans                                  -            336,038 
                                             ----------      ----------                                                            
       Total Investments                        281,033         336,038 
Cash                                               -               -    
                                             ----------      ----------                                                            
       Total Assets                             281,033         336,038 
                                             ----------      ----------                                                            
LIABILITIES                                                             
                                                                        
Due to Brokers                                     -               -    
Administrative Fees Payable                        -               -    
                                             ----------      ----------                                                            
       Total Liabilities                           -               -    
                                             ----------      ----------                                                            
NET ASSETS AVAILABLE FOR BENEFITS            $  281,033      $  336,038 
                                             ==========      ==========                                                            
</TABLE>
    The accompanying notes are an integral part of this financial statement.
                                      F-1
<PAGE>
                   UNITED RETAIL GROUP RETIREMENT SAVINGS PLAN

                 STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS

                                DECEMBER 31, 1997
<TABLE>
<CAPTION>
                                                   Company       Balanced     Fixed         Equity       Aggressive    Int'l       
                                        Total     Stock Fund       Fund       Fund           Fund           Fund       Fund        
                                        -----     ----------     --------     -----         ------       ----------    -----       
<S>                                  <C>        <C>            <C>          <C>          <C>            <C>             <C>
ASSETS
                                                                                                                                   
Investments, at Fair Value:                                                                                                        
 Common Stock:                                                                                                                     
  United Retail Group, Inc.         $  287,503    $  287,503     $     -      $     -       $     -     $     -      $     -       
  Other                                  5,973          -              -            -             -           -            -      
 Shares of Registered Investment                                                                                                 
  Companies:                                                                                                                     
   Scudder Balanced Fund             1,665,349          -         1,665,349         -             -           -            -      
   Scudder Cash Investment Trust     1,821,467          -              -       1,821,467          -           -            -      
   Scudder Growth and Income Fund    1,945,426          -              -            -        1,945,426        -            -      
   Janus Enterprise Fund               685,536          -              -            -             -        685,536         -      
   Warburg Pincus International                                                                                                  
    Equity                             349,042          -              -            -             -           -         349,042   
   Other                               196,955          -              -            -             -           -            -      
Participant Loans                      351,094          -              -            -             -           -            -      
                                    ----------    ----------     ----------   ----------    ----------  ----------   ----------    
NET ASSETS AVAILABLE FOR BENEFITS   $7,308,345    $  287,503     $1,665,349   $1,821,467    $1,945,426  $  685,536   $  349,042   
                                    ==========    ==========     ==========   ==========    ==========  ==========   ==========    

                                           Self Directed                   
                                             Brokerage         Loan      
                                           Account/Other       Fund      
                                           -------------       ----      
ASSETS                                                                  
                                                                        
Investments, at Fair Value:       
 Common Stock:                    
  United Retail Group, Inc.                $     -         $     -      
  Other                                         5,973            -    
 Shares of Registered Investment                                      
  Companies:                                                          
   Scudder Balanced Fund                         -               -    
   Scudder Cash Investment Trust                 -               -    
   Scudder Growth and Income Fund                -               -    
   Janus Enterprise Fund                         -               -    
   Warburg Pincus International                                       
    Equity                                       -               -    
   Other                                      196,955            -    
Participant Loans                                -            351,094 
                                           ----------      ----------                                                              
NET ASSETS AVAILABLE FOR BENEFITS          $  202,928      $  351,094 
                                           ==========      ==========            
</TABLE>
    The accompanying notes are an integral part of this financial statement.
                                       F-2
<PAGE>
                   UNITED RETAIL GROUP RETIREMENT SAVINGS PLAN

            STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

                      FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
                                                   Company       Balanced         Fixed        Equity       Aggressive    Int'l    
                                        Total     Stock Fund       Fund           Fund          Fund           Fund       Fund     
                                        -----     ----------     --------         -----        ------       ----------    -----    
<S>                                  <C>        <C>            <C>              <C>          <C>            <C>          <C>
Investment Income:                                                                                                                 
   Net Appreciation (Depreciation)                                                                                                 
     in Fair Value of Investments   $  738,400    $  530,593     $  206,266    $     -       $  (73,929)   $  (11,861)  $   14,578 
   Mutual Funds                        431,962            80        137,312        88,324       190,820        11,699           25 
   Interest                             26,503          -              -             -             -             -            -    
   Dividend                                216          -              -             -             -             -            -    
                                    ----------    ----------     ----------    ----------    ----------    ----------   ---------- 
     Total Investment Income                                                                                                       
       (Loss)                        1,197,081       530,673        343,578        88,324       116,891          (162)      14,603 
                                    ----------    ----------     ----------    ----------    ----------    ----------   ---------- 
Contributions:                                                                                                                     
   Employer                            170,685        12,602         39,850        25,066        55,184        26,936       11,047 
   Participants                        847,441        42,369        187,508       167,806       268,125       128,126       53,507 
                                    ----------    ----------     ----------    ----------    ----------    ----------   ---------- 
     Total Contribution              1,018,126        54,971        227,358       192,872       323,309       155,062       64,554 
                                    ----------    ----------     ----------    ----------    ----------    ----------   ---------- 
Loan Repayments                           -            6,159         45,862        50,828        48,308        18,363       10,630 
                                                                                                                                   
Loans Issued                              -          (12,902)       (48,941)      (51,944)      (44,666)      (11,761)     (10,286)
                                                                                                                                   
Interfund Transfers                       -          139,504        (56,034)       52,649       (84,524)      (21,003)     (32,026)
                                                                                                                                   
Administrative Expense                 (33,798)         (823)        (9,333)      (19,852)       (3,693)          (47)         (50)
                                                                                                                                   
Benefits to Participants              (849,836)      (54,569)      (166,347)     (129,147)     (278,089)     (120,351)     (59,424)
                                    ----------    ----------     ----------    ----------    ----------    ----------   ---------- 
Increase (Decrease) in Net                                                                                                         
   Assets Available for Benefits     1,331,573       663,013        336,143       183,730        77,536        20,101      (11,999)
                                                                                                                                   
Beginning Net Assets Available                                                                                                     
   for Benefits                      7,308,345       287,503      1,665,349     1,821,467     1,945,426       685,536      349,042 
                                    ----------    ----------     ----------    ----------    ----------    ----------   ---------- 
Ending Net Assets Available                                                                                                        
   for Benefits                     $8,639,918    $  950,516     $2,001,492    $2,005,197    $2,022,962    $  705,637   $  337,043 
                                    ==========    ==========     ==========    ==========    ==========    ==========   ========== 

                                           Self Directed                   
                                             Brokerage           Loan      
                                           Account/Other         Fund      
                                           -------------         ----      
Investment Income:                
   Net Appreciation (Depreciation)           
     in Fair Value of Investments          $   72,753        $     -      
   Mutual Funds                                 3,702              -     
   Interest                                      -               26,503  
   Dividend                                       216              -     
                                           ----------        ----------                                                            
     Total Investment Income                                             
       (Loss)                                  76,671            26,503  
                                           ----------        ----------                                                            
Contributions:                                                           
   Employer                                      -                 -     
   Participants                                  -                 -     
                                           ----------        ----------                                                            
     Total Contribution                          -                 -     
                                           ----------        ----------                                                            
Loan Repayments                                  -             (180,150) 
                                                                         
Loans Issued                                     -              180,500  
                                                                         
Interfund Transfers                             1,434              -     
                                                                         
Administrative Expense                           -                 -     
                                                                         
Benefits to Participants                         -              (41,909) 
                                           ----------        ----------                                                            
Increase (Decrease) in Net                                               
   Assets Available for Benefits               78,105           (15,056) 
                                                                         
Beginning Net Assets Available                                           
   for Benefits                               202,928           351,094  
                                           ----------        ----------                                                            
Ending Net Assets Available                                              
   for Benefits                            $  281,033        $  336,038  
                                           ==========        ==========                                             
</TABLE>
    The accompanying notes are an integral part of this financial statement.
                                       F-3
<PAGE>
                   UNITED RETAIL GROUP RETIREMENT SAVINGS PLAN

            STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

                      FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
                                                   Company        Balanced     Fixed        Equity     Aggressive     Int'l        
                                        Total     Stock Fund        Fund       Fund          Fund         Fund        Fund         
                                        -----     ----------      --------     -----        ------     ----------     -----        
<S>                                  <C>        <C>            <C>           <C>          <C>         <C>            <C>
Investment Income:                                                                                                                 
   Net Appreciation (Depreciation)                                                                                                 
     in Fair Value of Investments  $  467,300   $   52,323      $  223,334   $     -     $  269,056   $   33,065    $  (68,476)    
   Mutual Funds                       483,396         -             99,124       94,079     183,248       40,969        49,793     
   Interest                            25,312         -               -            -           -            -             -        
   Dividend                                53         -               -            -           -            -             -        
                                   ----------   ----------      ----------   ----------  ----------   ----------    ---------- 
     Total Investment Income                                                                                                       
       (Loss)                         976,061       52,323         322,458       94,079     452,304       74,034       (18,683)    
                                   ----------   ----------      ----------   ----------  ----------   ----------    ----------   
Contributions:                                                                                                                     
   Employer                           181,440       15,589          38,579       40,455      48,318       27,264        11,235     
   Participants                       828,786       33,852         178,529      164,277     256,517      139,379        56,232     
                                   ----------   ----------      ----------   ----------  ----------   ----------    ----------  
     Total Contribution             1,010,226       49,441         217,108      204,732     304,835      166,643        67,467     
                                   ----------   ----------      ----------   ----------  ----------   ----------    ----------  
Loan Repayments                          -           5,748          36,654       40,508      41,436       16,280        11,124     
                                                                                                                                   
Loans Issued                             -          (2,825)        (80,204)     (41,703)    (38,317)     (17,426)       (7,003)    
                                                                                                                                   
Interfund Transfers                      -          35,670          (7,945)    (313,701)     90,854      (19,483)      (14,089)
                                                                                                                                   
Administrative Expense                (40,411)        -            (11,225)     (23,970)     (4,962)        -             (254)    
                                                                                                                                   
Benefits to Participants             (964,847)     (25,516)       (292,321)    (183,768)   (331,884)     (55,725)      (31,172)    
                                   ----------   ----------      ----------   ----------  ----------   ----------    ----------   
Increase (Decrease) in Net                                                                                                         
   Assets Available for Benefits      981,029      114,841         184,525     (223,823)    514,266      164,323         7,390   
                                                                                                                                   
Beginning Net Assets Available                                                                                                     
   for Benefits                     6,327,316      172,662       1,480,824    2,045,290   1,431,160      521,213       341,652     
                                   ----------   ----------      ----------   ----------  ----------   ----------    ----------  
Ending Net Assets Available                                                                                                        
   for Benefits                    $7,308,345   $  287,503      $1,665,349   $1,821,467  $1,945,426   $  685,536    $  349,042     
                                   ==========   ==========      ==========   ==========  ==========   ==========    ==========    

                                           Self Directed                   
                                             Brokerage             Loan      
                                           Account/Other           Fund      
                                           -------------           ----      
Investment Income:                
   Net Appreciation (Depreciation)
     in Fair Value of Investments           $  (42,002)        $     -    
   Mutual Funds                                 16,183               -    
   Interest                                       -                25,312 
   Dividend                                         53               -    
                                            ----------         ----------                                                          
     Total Investment Income                                              
       (Loss)                                  (25,766)            25,312 
                                            ----------         ----------                                                          
Contributions:                                                            
   Employer                                       -                  -    
   Participants                                   -                  -    
                                            ----------         ----------                                                          
     Total Contribution                           -                  -    
                                            ----------         ----------                                                          
Loan Repayments                                   -              (151,750)
                                                                          
Loans Issued                                      -               187,478 
                                                                          
Interfund Transfers                            228,694               -    
                                                                          
Administrative Expense                            -                  -    
                                                                          
Benefits to Participants                          -               (44,461)
                                            ----------         ----------                                                          
Increase (Decrease) in Net                                                
   Assets Available for Benefits               202,928             16,579 
                                                                          
Beginning Net Assets Available                                            
   for Benefits                                   -               334,515 
                                            ----------         ----------                                                          
Ending Net Assets Available                                               
   for Benefits                             $  202,928         $  351,094 
                                            ==========         ==========                                            
</TABLE>
    The accompanying notes are an integral part of this financial statement.
                                       F-4

<PAGE>
                   UNITED RETAIL GROUP RETIREMENT SAVINGS PLAN

                          NOTES TO FINANCIAL STATEMENTS



(1)    DESCRIPTION OF THE PLAN

       General

       The United Retail Group Retirement Savings Plan (the "Plan") is a defined
          contribution plan covering certain employees of United Retail Group,
          Inc. and its affiliates (the "Employer") who are at least 21 years of
          age and have completed 1,000 or more hours of service during their
          first consecutive twelve months of employment or any calendar year
          beginning in or after their first consecutive twelve months of
          employment. Certain employees of the Employer, who are covered by a
          collective bargaining agreement, are not eligible to participate in
          the Plan.

       The following description of the Plan provides only general information.
          Participants should refer to the Plan agreement for a more complete
          description of the Plan's provisions. The Plan is subject to the
          provisions of the Employee Retirement Income Security Act of 1974
          (ERISA) as amended.

       Amendments

       Effective January 1, 1998, the Plan was amended to increase the maximum
          allowable percentage as noted under "Contributions" below.

       Effective January 1, 1997, the Plan was amended and restated to, among
          other things, 
          (1) allow in-service withdrawals as noted under "Payment of Benefits" 
              below, and 
          (2) make certain changes in the Plan as were required by law.

       Contributions

       Employer Contributions:

       The Employer may provide a 50% matching contribution on the first 3% of a
          participant's voluntary contributions.

       Participant Voluntary Contribution:

       A participant may elect to make a voluntary tax-deferred contribution of
          1% to 15% of his or her annual compensation up to the maximum
          permitted under Section 402(g) of the Internal Revenue Code adjusted
          annually ($10,000 at December 31, 1998). Prior to January 1, 1998 a
          voluntary tax-deferred contribution up to only 12% was allowed. The
          annual compensation of each participant taken into account under the
          Plan is limited to the maximum amount permitted under Section
          401(a)(17) of the Internal Revenue Code. The annual compensation limit
          for the Plan year ended December 31, 1998, was $160,000. This
          voluntary tax-deferred contribution may be limited by Section 401(k)
          of the Internal Revenue Code.

                                       F-5
<PAGE>

       Vesting

       A participant is fully and immediately vested for voluntary and rollover
          contributions and is credited with a year of vesting service in the
          Employer's contributions for each Plan year that they are credited
          with a least 500 hours of service. A summary of vesting percentages in
          the Employer's contributions follows:

          Years of Vesting Service                        Percentage
          ------------------------                        ----------
              Less than 3 years                                0%
              3 years                                         20
              4 years                                         40
              5 years                                         60
              6 years                                         80
              7 years                                        100

       Payment of Benefits

       The full value of participants' accounts becomes payable upon retirement,
          disability, or death. Upon termination of employment for any other
          reason, participants' accounts, to the extent vested, become payable.
          Participants will receive any benefit to which they are entitled in
          the form of, (1) lump-sum cash distribution, with those participants
          holding more than 100 shares of Employer Securities receiving shares
          for the portion of their account invested in Employer Securities, (2)
          if eligible a payment directly to an eligible retirement plan
          specified by the Participant or (3) if the account balance is greater
          than $3,500 and the Participant has attained age 70-1/2, cash
          installments over a period not extending beyond the life expectancy of
          the Participant or the joint and last survivor life expectancies of
          the Participant and a designated Beneficiary. Those participants with
          vested account balances more than $5,000 have the option of leaving
          their accounts invested in the Plan until age 65.

       Participants may make in-service withdrawals from their account of
          participant deferrals if they have obtained the age of 59-1/2 and all
          vested amounts if they have obtained the age of 65, based on the terms
          of the plan.

       Participant Loans

       Participants are permitted to borrow from their account the lesser of
          $50,000 or 50% of the vested balance of their account for a term of
          not more than five years with repayment made from payroll deductions.
          All loans become due and payable in full upon a participant's
          termination of employment with the Employer. The borrowing constitutes
          a separate earmarked investment of the participant's account. Interest
          on the borrowing is based on a formula using the published money call
          rate on the date of application.

       Amounts Allocated to Participants Withdrawn from the Plan

       The vested portion of net assets available for plan benefits allocated to
          participants withdrawn from the Plan as of December 31, 1998 and
          1997, is set forth below:

                                           1998                  1997 
                                         -------               -------
          Stock Fund                     $   186               $  -
          Balanced Fund                      186                 3,661
          Fixed Fund                         166                 6,258
          Equity Fund                        171                27,812
          Aggressive Fund                    180                21,694
          International Fund                 166                17,480
          Other                            2,851                  -   
                                         -------               -------
                                         $ 3,906               $76,905
                                         =======               =======

                                       F-6
<PAGE>
       Forfeitures

       Forfeitures are used to reduce the Employer's required contributions.
          Utilized forfeitures for 1998 and 1997, is set forth below:

                                           1998                  1997  
                                         --------              --------
          Stock Fund                     $  3,043              $  2,141
          Balanced Fund                     9,177                 9,643
          Fixed Fund                       21,405                 6,508
          Equity Fund                      11,662                17,501
          Aggressive Fund                   4,089                 5,781
          International Fund                1,716                 2,148
                                         --------              --------
                                         $ 51,092              $ 43,722
                                         ========              ========

       Expenses

       Brokerage fees, transfer taxes, and other expenses incurred in connection
          with the investment of the Plan's assets will be added to the cost of
          such investments or deducted from the proceeds thereof, as the case
          may be. Administrative expenses of the Plan will be allocated to
          participants' accounts, unless the Employer elects to pay any or all
          of such costs.

       Tax Determination

       The Plan obtained its latest determination letter on February 23, 1998,
          in which the Internal Revenue Service stated that the Plan, as amended
          and restated January 1, 1997, was in compliance with the applicable
          requirements of the Internal Revenue Code. The Plan has been amended
          since receiving the determination letter. However, the Plan
          administrator and the Plan's tax counsel believe that the Plan is
          designed and is currently being operated in compliance with the
          applicable requirements of the Internal Revenue Code. Accordingly,
          the following Federal income tax rules will apply to the Plan:

              Voluntary tax-deferred contributions made under the Plan by a
              participant and contributions made by the Employer to participant
              accounts are generally not taxable until such amounts are
              distributed.

              The participants are not subject to Federal income tax on
              interest, dividends, or gains in their particular accounts until
              distributed.

       The foregoing is only a brief summary of certain tax implications and
          applies only to Federal tax regulations currently in effect.

(2)    SUMMARY OF ACCOUNTING POLICIES

       Basis of Accounting

       The Plan's financial statements are prepared on the accrual basis of
          accounting. Assets of the Plan are valued at fair value. The
          preparation of the financial statements in conformity with generally
          accepted accounting principles requires the Plan's management to use
          estimates and assumptions that affect the accompanying financial
          statements and disclosures. Actual results could differ from these
          estimates.

       Income Recognition

       Purchases and sales of securities are recorded on a trade-date basis.
          Interest income is recorded on the accrual basis. Dividends are
          recorded on the ex-dividend date.

                                       F-7
<PAGE>
       Investment Valuation

       Mutual funds are stated at fair value as determined by quoted market
          prices, which represents the net asset value of shares held by the
          Plan at year end. Common stock is valued as determined by quoted
          market price.

       Net Appreciation (Depreciation) in Fair Value of Investments

       Net realized and unrealized appreciation (depreciation) is recorded in
          the accompanying statement of changes in net assets available for
          benefits as net appreciation (depreciation) in fair value of
          investments.

       Brokerage fees are added to the acquisition costs of assets purchased and
          subtracted from the proceeds of assets sold.

       Benefit Payments

       Benefits are recorded when paid.

       Reclassification of Prior Year Information

       Certain prior year information has been reclassified to conform with
          current year presentation.

(3)    INVESTMENTS

       The Plan's investments are held by Scudder Trust Company, a subsidiary of
          Scudder Kemper Investments, Inc., manager of certain mutual funds in
          which the Plan invests. The following table presents balances for 1998
          and 1997 for the Plan's current investment options. Investments that
          represent 5 percent or more of the Plan's net assets are separately
          identified.
<TABLE>
<CAPTION>
                                                                                       1998                   1997    
                                                                                    ------------          ------------
<S>                                                                                <C>                   <C>    
          Investments at Fair Value as Determined by
              Quoted Market Price:
                  Common Stock:
                      United Retail Group, Inc. (88,276 and
                           71,029 Shares at a Cost of $655,552
                           and 503,325 for 1998 and 1997,
                           Respectively)                                            $   948,967           $   287,503
                      Other                                                               7,062                 5,973
                  Shares of Registered Investment Companies:
                      Scudder Balanced Fund                                           2,003,077             1,665,349
                      Scudder Cash Investment Trust                                   2,008,561             1,821,467
                      Scudder Growth and Income Fund                                  2,023,589             1,945,426
                      Franklin Small Cap Growth Fund - Class A                          705,645                  -
                      Warburg Pincus International Equity                               337,051               349,042
                      Janus Enterprise Fund                                                -                  685,536
                      Other                                                             275,655               196,955
          Investments at Estimated Fair Value:
                  Participant Loans                                                     336,038               351,094
                                                                                    -----------           -----------
                                                                                    $ 8,645,645           $ 7,308,345
                                                                                    ===========           ===========
</TABLE>
       The Plan's investments (including investments bought, sold, and held
          during the year) appreciation in value for the years ended December
          31, 1998 and 1997, is set forth below:
<TABLE>
<CAPTION>
                                                                                      1998                  1997  
                                                                                    --------              --------
<S>                                                                                <C>                   <C>    
          Investments at Fair Value as Determined
              by Quoted Market Price:
                  Shares of Registered
                      Investment Companies                                          $206,740              $414,999
                  Common Stock                                                       531,660                52,301
                                                                                    --------              --------
                                                                                    $738,400              $467,300
                                                                                    ========              ========
</TABLE>
                                       F-8
<PAGE>
       Contributions under the Plan may be invested in any one or more of seven
          investment options: (1) The Company Stock Fund, consisting of common
          stock of United Retail Group, Inc., (2) the Balanced Fund, which is
          invested in the Scudder Balanced Fund, (3) the Fixed Fund, which is
          invested in the Scudder Cash Investment Trust, (4) the Equity Fund,
          which is invested in the Scudder Growth and Income Fund, (5) the
          Aggressive Fund, which is invested in the Franklin Small Cap Growth
          Fund - Class A which replaced the investment in the Janus Enterprise
          Fund in 1997, (6) the International Fund, which invests in the Warburg
          Pincus International Equity Fund, and (7) a self-directed brokerage
          account.

       Participants' voluntary and the Employer's contributions may be invested
          in any one or more of the options, at the election of the participant,
          except for the self- directed brokerage account which only allows
          participants to transfer existing balances based on the terms of the
          Plan.

       Subsequent to year end the Plan's management replaced the Scudder Cash
          Investment Trust and the Warburg Pincus International Equity Fund with
          the Scudder U.S. Treasury Money Fund and Janus Overseas Fund,
          respectively. The Plan's management also added the Scudder Short Term
          Bond Fund as a new investment option.

(4)    PLAN ADMINISTRATION

       The Plan is administered by a Committee, the members of which are
          appointed by the Board of Directors of the Employer.

(5)    PLAN TERMINATION

       Although the Employer has not expressed any intent, the Employer has the
          right under the Plan to discontinue their contributions at any time.
          United Retail Group, Inc. has the right at any time, by action of its
          Board of Directors, to terminate the Plan subject to the provisions of
          ERISA. Upon Plan termination or partial termination, participants
          will become fully vested in their accounts.

(6)    RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500

       The following is a reconciliation of net assets available for benefits
          per the financial statements to Form 5500:
<TABLE>
<CAPTION>
                                                                              1998                  1997   
                                                                           ----------            ----------
<S>                                                                       <C>                   <C>    
          Net Assets Available for Benefits Per
              The Financial Statements                                     $8,645,650            $7,308,345
          Amounts Allocated to Withdrawing
              Participants                                                     (3,906)              (76,905)
                                                                           ----------            ----------
          Net assets Available for Benefits Per
              Form 5500                                                    $8,641,744            $7,231,440
                                                                           ==========            ==========
</TABLE>
       The following is a reconciliation of benefits paid to participants per
          the financial statements to Form 5500:

                                                           1998 
                                                          ------ 
          Benefits Paid to Participants Per
              the Financial Statements                   $849,836
          Amounts Allocated to Withdrawing
              Participants at:
                  December 31, 1998                         3,906
                  December 31, 1997                       (76,905)
                                                         --------
          Benefits Paid to Participants Per
              Form 5500                                  $776,837
                                                         ========

       Amounts allocated to withdrawing participants are recorded on Form 5500
          for benefit claims that have been processed and approved for payment
          prior to December 31, but not yet paid as of that date.

                                       F-9
<PAGE>

                                                                      SCHEDULE I

                   UNITED RETAIL GROUP RETIREMENT SAVINGS PLAN
                            EIN #51-0303670 PLAN #003
           ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
                                DECEMBER 31, 1998
<TABLE>
<CAPTION>
                                         Description of Investment Including Maturity                              
        Identity of Issuer, Borrower,     Date, Rate of Interest, Collateral, Par or                     Current  
          Lessor, or Similar Party                       Maturity Value                       Cost        Value  
-----   ----------------------------     --------------------------------------------       --------     --------
<S>                                    <C>                                                 <C>          <C>        
  *   United Retail Group, Inc.        88,276 Shares of Common Stock, Par Value $0.001     $  655,552   $  948,967 

  *   Scudder Kemper Investments,      105,646.761 Shares of Scudder Balanced Fund, Par     1,660,697    2,003,077 
      Inc.                             Value $0.01                                                                 

  *   Scudder Kemper Investments,      2,008,560.53 Shares of Scudder Cash Investment       2,008,561    2,008,561 
      Inc.                             Trust, Par Value $0.01, 7 Day Net Annualized                                
                                       Yield on 12/30/98 of 4.46%                                                  

  *   Scudder Kemper Investments,      76,913.315 Shares of Scudder Growth and Income       1,942,014    2,023,589 
      Inc.                             Fund, Par Value $0.01                                                       

  *   Scudder Kemper Investments,      2,851.37 Shares of Scudder U.S. Treasury Money           2,851        2,851 
      Inc.                             Market Fund, Par Value $0.01, 7 Day Net                                     
                                       Annualized Yield on 12/31/98 of 4.23%                                       

  *   Scudder Kemper Investments,      1,684.48  Shares of Scudder Money market                 1,684        1,684 
      Inc.                             Series #23,  Daily Rate on 12/31/98 of 5.1%                                      

      Templeton Franklin Investment    31,264.389 shares of Franklin Small Cap Growth         705,640      705,645 
      Services, Inc.                   Fund - Class A, Par Value $0.01                                             

      Warburg Pincus Funds             18,946.069 Shares of Warburg Pincus                    364,315      337,051 
                                       International Equity, Par Value $0.01                                       

      Fidelity Investments             1,332.958 of Select Electronics, Par Value $0.01        63,529       62,062 
</TABLE>

* Represents a party in interest

          The accompanying notes are an integral part of this schedule.
                                      F-10
<PAGE>
                                                                     SCHEDULE I
                   UNITED RETAIL GROUP RETIREMENT SAVINGS PLAN
                            EIN #51-0303670 PLAN #003
           ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
                                DECEMBER 31, 1998

<TABLE>
<CAPTION>
                                         Description of Investment Including Maturity                              
        Identity of Issuer, Borrower,     Date, Rate of Interest, Collateral, Par or                     Current  
          Lessor, or Similar Party                       Maturity Value                       Cost        Value  
-----   ----------------------------     --------------------------------------------       --------     --------
<S>                                    <C>                                                 <C>          <C>        
       T. Rowe Price Associates, Inc.  1,778.75 Shares of T. Rowe Price Science &            62,150         67,005
                                       Technology, Par Value $0.01                                                
       
       Fred Alger Management           2,982.133 Shares of Spectra Fund, Inc., Par           58,212         75,179
                                       Value $0.01                                                                
       
       Stein Roe                       2,470.784 Shares of Stein Roe Young Investor          56,739         66,069
                                       Fund, Par Value $0.01                                                      
       
       Philip Morris, Inc.             132 Shares of Common Stock, Par Value $0.33 1/3        5,995          7,062
       
       State Street                    804.58 Shares of Seven Seas Money Market Fund,           805            805
                                       Par Value %0.01, 7 Day Net Annualized Yield on                             
                                       12/30/98 of 4.83%                                                          
       
       Participant Loans               Interest from 7.5% - 9.25%                              -           336,038
                                                                                         ----------     ----------        
                                                                                         $7,588,744     $8,645,645
                                                                                         ==========     ==========      
</TABLE>

* Represents a party in interest

          The accompanying notes are an integral part of this schedule.
                                      F-11
<PAGE>
                                                                   SCHEDULE II

                   UNITED RETAIL GROUP RETIREMENT SAVINGS PLAN
                            EIN #51-0303670 PLAN #003
            ITEM 27b - SCHEDULE OF LOANS OR FIXED INCOME OBLIGATIONS
                                DECEMBER 31, 1998
<TABLE>
<CAPTION>
                                                                              Detail Description of Loan  
                                                                              Including Dates of Making   
                                                                             and Maturity, Interest Rate, 
                                                                               The Type and Value of      
                                                                                  Collateral, Any         
                                     Principal     Interest     Unpaid         Renegotiation of the Loan  
                      Original        Received     Received     Balance          and the Terms of the     
     Identity and     Amount of        During       During      End of          Renegotiation and Other      Principal    Interest  
  Address of Obligor    Loan            Year         Year        Year               Material Items            Overdue     Overdue   
  ------------------  ---------      ---------     --------    ---------     -----------------------------   ---------    --------  
<S>                   <C>            <C>           <C>          <C>          <C>                             <C>          <C>       
Charlene Macaluso     $   1,142      $    -        $   -        $ 1,142     Participant loan secured by      $   1,142    $   151   
331 West 75th Place                                                         account balance, issued                                 
Merrillville, In.                                                           5/23/95 at 9.25%.  Balance                              
SS# ###-##-####                                                             and accrued interest reported                           
                                                                            as deemed distribution in                               
                                                                            prior years.                                            

Karen Denoyer             4,200           -            -          4,071     Participant loan secured by          4,071         17   
305 N. 59th Street                                                          account balance, issued                                 
Milwaukee, Wi.                                                              8/5/95 at 9.25%.  Reported as                           
SS# ###-##-####                                                             deemed distribution in prior                            
                                                                            years.                                                  

Laura L. Altobelli        5,106            306          105       3,619     Participant loan secured by          3,619         -    
19624 Reno                                                                  account balance, issued                                 
Detroit, Mi                                                                 7/10/96 at 8%.  Reported as                             
###-##-####                                                                 deemed distribution in the                              
                                                                            current year.                                           

Laura L. Altobelli        2,000            109           44       1,816     Participant loan secured by          1,816         -    
19624 Reno                                                                  account balance, issued                       
Detroit, Mi                                                                 8/29/97 at 8.25%.  Reported      
###-##-####                                                                 as deemed distribution in the 
                                                                            current year.                 
</TABLE>

          The accompanying notes are an integral part of this schedule.
                                      F-12

<PAGE>
                                                                  SCHEDULE III
 
                   UNITED RETAIL GROUP RETIREMENT SAVINGS PLAN
                            EIN #51-0303670 PLAN #003
                 ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
                      FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
                                                                          Purchases                                     Sales 
                                                                   ----------------------------      -------------------------------
                                                                                      Current                                       
                                                                                       Value                                        
                             Description of Asset                                   of Asset on                                     
   Identity of               (Include Interest Rate and             Purchase        Transaction        Selling          Cost of     
  Party Involved             Maturity in Case of a Loan               Price            Date              Price           Assets     
-----------------            --------------------------            ----------       -----------       ----------       ----------   
<S>                          <C>                                   <C>              <C>              <C>               <C>          
*Scudder Kemper              Scudder Balanced Fund                 $  469,569       $  469,569       $  340,039        $  293,488   
 Investments, Inc.

*Scudder Kemper              Scudder Growth and Income                676,571          676,571          524,265           464,757   
 Investments, Inc.           Fund

*Scudder Kemper              Scudder Cash Investment                  565,661          565,661          378,567           378,567   
 Investments, Inc.           Trust

 Janus Capital               Janus Enterprise Fund                       -                -             677,312           653,937   

 Templeton                   Franklin Small Cap Growth                918,783          918,783          208,231           213,143   
 Franklin                    Fund - Class A
 Investment
 Services, Inc.


                               ------------------------------
                                 Current                     
                                  Value                      
                               of Asset on                   
                               Transaction          Net Gain 
                                   Date             or (Loss)
                               ----------          ----------
                               <C>            <C>            
*Scudder Kemper                $  340,039          $  46,551      
 Investments, Inc.                                           
                                                             
*Scudder Kemper                   524,265             59,508      
 Investments, Inc.                                           
                                                             
*Scudder Kemper                   378,567               -    
 Investments, Inc.                                           
                                                             
 Janus Capital                    677,312            23,375 
                                                             
 Templeton                        208,231            (4,912)
 Franklin                                                    
 Investment                   
 Services, Inc.   
</TABLE>

*Represents a party in interest

          The accompanying notes are an integral part of this schedule.
                                      F-13