<PAGE> 1
FORM 10-K
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 [FEE REQUIRED]
For the fiscal year ended February 3, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
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
(Title of class)
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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. [ ]
As of February 29, 1996, the aggregate market value of the voting stock of the
registrant (also referred to herein as the "Company") held by non-affiliates of
the registrant was approximately $19.1 million. For purposes of the preceding
sentence only, affiliate status was determined on the basis that all
stockholders of the registrant are non-affiliates except (i) the officers and
directors of the registrant and its subsidiaries and (ii) other stockholders who
have filed statements with the Securities and Exchange Commission (the "SEC")
under Section 13(d) of the 1934 Act reporting beneficial ownership of more than
5% of the voting stock of the registrant, regardless of the reported purpose of
their holdings.
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 March 31, 1996, 12,190,375 shares of the registrant's common stock, $.001
par value per share, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The registrant's annual report for the year ended February 3, 1996 is
incorporated in part by reference in Part II of this Form 10-K.
The registrant's proxy statement for its 1996 annual meeting of stockholders is
incorporated in part by reference in Part III of this Form 10-K.
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PART I
Item 1. Business.
OVERVIEW
The Company is a leading nationwide specialty retailer of
large-size women's apparel and accessories, offering private label merchandise
with a "designer" look. The Company's merchandising strategy is to offer its
customers merchandise of the same quality and variety available in smaller
sizes. The Company operates 576 stores in 37 states principally under the names
The Avenue(R) and Sizes Unlimited.
CUSTOMER BASE
The Company seeks to serve the mass market and targets
fashion-conscious women between 18 and 50 years of age who wear size 14 or
larger. The Company believes that this market is underserved by many department
and specialty retail stores that do not offer wide selections of fashionable
large-size women's apparel. In addition, the large-size customer often has fewer
store alternatives in nearby shopping malls and strip shopping centers than her
smaller-size counterpart.
HISTORY
The Company was incorporated in 1987 and completed its initial
public offering in 1992. The Company's current business resulted from an
internal reorganization at The Limited, Inc. ("The Limited") in 1987, in which
The Limited combined its underperforming The Avenue(R) store group (then
operating under the Lerner Woman trade name) with the Sizes Unlimited store
group. Raphael Benaroya, the Company's Chairman of the Board, President and
Chief Executive Officer, and his management team were selected to design and
implement a plan to turn around the combined businesses. In the spring of 1988,
management launched its business plan, which was designed to increase average
store sales and close stores with low sales potential. From the beginning of
Fiscal 1988 through Fiscal 1991, the Company focused on rationalizing its store
base by closing 64 stores while opening only 37 new stores. The business plan
also focused on improving merchandise quality and fit, introducing more
fashionable lines, enhancing the store shopping experience with strong
merchandise presentations and upgraded customer service, renovating existing
stores and designing and building new-store prototypes.
From Fiscal 1992 through Fiscal 1995, the Company expanded its
store base by opening individual new stores and by acquiring groups of closed
stores from other retail chains. See, "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
MERCHANDISING AND MARKETING
The Company's strategy is to offer its customers a "designer"
look in moderately priced private label merchandise. It emphasizes consistency
of merchandise quality and fit and aggressively updates its merchandise
selections to reflect customer demand and fashion trends. The apparel industry
is subject to rapidly changing consumer fashion preferences and the Company's
performance depends on its ability to respond quickly to changes in fashion.
Each store operated by the Company offers selections of casual
wear, career apparel, specialty items and accessories. The casual wear
assortment includes comfortably fitted jeans, slacks, T-shirts, skirts, active
wear and sweaters. Casual wear comprises the majority of the Company's sales.
The career assortment includes skirts, soft blouses, jackets, suits, dresses and
coats. Specialty items include a full line of sleepwear and lingerie.
Accessories include earrings, pins, scarves, socks, hosiery and a selection of
gift items. The Company offers most of its merchandise at popular or moderate
price
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points, including blouses in the $20 to $40 price range, jeans and slacks
in the $20 to $35 price range and dresses and suits in the $49 to $99 price
range.
The Company promotes private label merchandise, which has
higher gross profit margins and which the Company believes creates an exclusive
"designer" image that helps distinguish it from competitors. Through careful
brand management, including consistent imaging of its private label merchandise,
the Company believes it enhances brand recognition and the customer's perception
of value. Branded private label merchandise includes casual wear (Forelli(R))
and career apparel (Adrian Jordan(R)). The Avenue(R) label is also used on both
casual wear and career apparel. Private label garments are tagged, packaged and
presented at the Company's stores in a manner consistent with more expensive
garments with national brand names.
The Company develops new merchandise assortments on average
six times each year. Merchandise selection is allocated to each store based on
many factors, including store location, store profile and sales experience. The
Company regularly updates each store's profile based on its customers' fashion
and price preferences and local demographics. The Company's point-of-sale
systems gather financial, credit, inventory and other statistical information
from each store on a daily basis. This information is then used to evaluate and
adjust each store's merchandise mix on a weekly basis.
The Company uses creative merchandise displays, distinctive
signage and upscale packaging that, combined with attractive store decor, create
an atmosphere comparable to that of other quality specialty retailers and
department stores. To further stimulate store traffic, the Company frequently
uses credit card inserts with announcements of upcoming events.
MERCHANDISE DISTRIBUTION AND INVENTORY MANAGEMENT
The Company believes that short production schedules and rapid
movement of merchandise from manufacturers to its stores are vital to minimize
business risks arising from changing fashion trends.
The Company uses a centralized distribution system, under
which all merchandise is received, processed and distributed through a
distribution complex located in Troy, Ohio. Merchandise received at the
distribution center is promptly assigned to individual stores, packed for
delivery and shipped to the stores.
The Company maintains a worldwide logistics network of agents
and space availability arrangements to support the in-bound movement of
merchandise into the distribution complex. The out-bound system consists of
common carrier line haul routes connecting the distribution complex to a network
of delivery agents. This system enables the Company to provide every store with
frequent deliveries. The Company does not own or operate trucks or trucking
facilities.
The Company manages its inventory levels, merchandise
allocation to stores and sales replenishing for each store through its
computerized management information systems, which enable the Company to profile
each store and evaluate and adjust each store's merchandise mix on a weekly
basis. New merchandise is allocated by style, color and size immediately before
shipment to stores to achieve a merchandise assortment that is suited to each
store's customer base.
The Company's inventory management strategy is designed to
maintain targeted inventory turnover rates and minimize the amount of unsold
merchandise at the end of a season by closely comparing sales and fashion trends
with on-order merchandise and making necessary purchasing adjustments.
Additionally, the Company uses markdowns and promotions as necessary.
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MANAGEMENT INFORMATION SYSTEMS
The applications software for the Company's management
information systems was acquired by the Company from The Limited. The Company's
management information systems consist of a full range of store, financial and
merchandising systems, including credit, inventory distribution and control,
sales reporting, accounts payable, cash/credit, merchandise reporting and
planning. All of the Company's stores have point-of-sale terminals that transmit
daily information on sales by merchandise category as well as style, color and
size. The Company evaluates this information, together with its report on
merchandise shipments to the stores, to implement merchandising decisions
regarding markdowns, reorders of fast-selling items and allocation of
merchandise. In addition, the Company's headquarters and distribution center are
linked through an interactive computer network.
Company employees located at its headquarters maintain and
support the applications software, operations, networking and point-of-sale
functions of the Company's management information systems. The hardware and
systems software for the Company's management information systems are maintained
by Integrated Systems Solutions Corporation ("ISSC"), a wholly-owned subsidiary
of IBM. The computer hardware used in processing is located in Lexington,
Kentucky, at a facility operated by ISSC.
PURCHASING
Separate groups of merchants are responsible for different
categories of merchandise. See, also, "Management's Discussion and Analysis of
Financial Condition and Results of Operations." Most of the merchandise
purchased by the Company consists of either manufacturer's "line merchandise"
produced under the Company's private label or custom designed garments produced
for the Company by contract manufacturing, also under the Company's private
labels. An item of merchandise is test marketed, whenever possible, in limited
quantities prior to mass production to help identify the current fashion
preferences of the Company's customers.
The Company provides manufacturers with strict guidelines for
size specifications and gradings to ensure proper, consistent fit across product
categories. The Company and independent sourcing agents monitor production by
manufacturers in the United States and abroad to ensure that size
specifications, grading requirements and other specifications are met.
In Fiscal 1995, a single manufacturer accounted for more than
5% but less than 10% of the Company's merchandise purchases. No manufacturer
accounted for 10% or more of the Company's merchandise purchases. Domestic
purchases (some of which are foreign-made products) are executed by Company
purchase orders. Import purchases are made in U.S. dollars and are generally
financed by letters of credit.
CREDIT SALES
The Company permits its customers to use several methods of
payment, including cash, personal checks, third-party credit cards, layaways and
its own credit cards.
All of the Company's proprietary credit cards are issued by
Citibank (South Dakota) N.A., which purchases credit card charges from the
Company daily at a discount that is adjusted annually.
COMPETITION
All aspects of the women's retail apparel business are highly
competitive. Many of the competitors are units of large national chains that
have substantially greater resources than the Company. Management believes its
principal competitors include all major national and regional department stores,
specialty retailers (including Lane Bryant, Inc. which is a subsidiary of The
Limited, and which management believes is the largest specialty retailer of
large-size women's apparel), discount stores, mail order companies, television
shopping channels and interactive electronic media.
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Management believes its merchandise selection, prices, consistency of
merchandise quality and fit, and appealing shopping experience emphasizing
strong merchandise presentations, together with its experienced management team,
management information systems and logistics capabilities, enable it to compete
in the marketplace.
TRADE NAMES AND TRADEMARKS
The Company is the owner in the United States of its principal
trademarks, The Avenue(R), Forelli(R) and Adrian Jordan(R), which are registered
with the Patent and Trademark Office. The Company is also the sublicensee of
certain national brand names. See, "Certain Relationships and Related
Transactions." The Company believes that no individual trade name or trademark
is material to the Company's competitive position in the industry. The Company
is not aware of any use of any of its trade names or principal trademarks by its
competitors that has a material effect on the Company's operations (except that
the Company has agreed not to use the Sizes Unlimited trade name in the states
of Washington and Oregon, where the Company operates stores under the trade name
Smart Size) or any material claims of infringement or other challenges to the
Company's right to use its trade names or principal trademarks in the United
States.
EMPLOYEES
As of March 16, 1996, the Company employed approximately 5,300
associates, of whom approximately 2,000 worked full-time and the balance of whom
worked part-time. Considerable seasonality is associated with employment levels.
Approximately 80 store associates are covered by collective bargaining
agreements. The Company believes that its relations with its associates are
good.
SEASONALITY
The Company's business is seasonal, with the first half of
each fiscal year providing a greater portion of the Company's annual net sales
and operating income. See, "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
Item 2. Properties.
As of February 29, 1996, the Company operated stores in 37
states:
<TABLE>
<S> <C> <C> <C>
Alabama 6 Nevada 1
Arizona 5 New Hampshire 4
Arkansas 1 New Jersey 39
California 87 New Mexico 1
Colorado 1 New York 56
Connecticut 13 North Carolina 10
Delaware 2 Ohio 23
Florida 25 Oklahoma 4
Georgia 21 Oregon 6
Illinois 48 Pennsylvania 21
Indiana 8 Rhode Island 2
Iowa 2 South Carolina 10
Kentucky 5 Tennessee 13
Louisiana 11 Texas 39
Maine 1 Utah 1
Maryland 18 Virginia 12
Massachusetts 21 Washington 10
Michigan 29 Wisconsin 11
Missouri 9
Total: 576
</TABLE>
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Of the Company's stores, 303 were in strip shopping centers,
243 were in shopping malls, and 30 were in downtown shopping districts. Stores
generally range in size from 2,500 to 6,000 net square feet. The Company leases
all its store locations.
The Company leases its executive offices, which consist of
approximately 56,000 square feet and are located in an office building at 365
West Passaic Street, Rochelle Park, New Jersey. The office lease has a term
ending in August 1999.
The Company owns a 128-acre site on Interstate 75 in Troy,
Ohio, on which its national distribution center is located. The national
distribution center is equipped to service 900 stores. The site is adequate for
a total of four similar facilities.
Item 3. Legal Proceedings.
The Company is involved in various routine legal proceedings
incidental to the conduct of its business and maintains reserves that include,
among other things, the estimated cost of uninsured payments to accident victims
and payments to vendors of goods and services resulting from certain disputes.
Management believes that, giving effect to reserves, these legal proceedings
will not have a material adverse effect on the financial condition or results of
operations of the Company.
No material pending legal proceeding to which the Company was
a party was terminated during the fourth quarter of the fiscal year ended
February 3, 1996.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
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PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.
The section captioned "Shareholder Information" in the
registrant's 1995 annual report to stockholders is incorporated herein by
reference. (Only those portions of the 1995 annual report to stockholders
incorporated by reference in another document filed with the SEC shall be deemed
"filed" in accordance with the rules and regulations promulgated by the SEC.)
Item 6. Selected Financial Data.
The section captioned "Selected Financial Data" in the
registrant's 1995 annual report to stockholders is incorporated herein by
reference.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
The section captioned "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the registrant's 1995 annual
report to stockholders is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data.
The section captioned "Consolidated Financial Statements" in
the registrant's 1995 annual report to stockholders is incorporated herein by
reference.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
Not applicable.
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PART III
Item 10. Directors and Executive Officers of the Registrant.
The subsections captioned "Election of Directors - Nominees"
and " - Business Experience" in the registrant's proxy statement for its 1996
annual meeting of stockholders (the "Proxy Statement") is incorporated herein by
reference.
In addition to Raphael Benaroya and George R. Remeta, the
executive officers of the registrant or its subsidiaries are:
Charles R. Wilkinson, age 51, has been the Executive Vice
President - Organizational Development of United Retail Incorporated, a
subsidiary of the registrant, since June 1991. He was employed at The Children's
Place, Inc., a chain of retail children's apparel stores, as Chief Executive
Officer since before 1991.
Kenneth P. Carroll, age 53, was the Company's Vice President -
General Counsel from March 1992 to March 1996, when he was elected the Senior
Vice President - General Counsel. Previously, he was a member of Bachner, Tally,
Polevoy & Misher, a law firm, since before 1991.
Ellen Demaio, age 38, has been employed by United Retail
Incorporated as a merchant since before 1991. In 1992, she was elected a Vice
President - Merchandise of United Retail Incorporated and in 1994 she was
elected the Senior Vice President - Merchandise of United Retail Incorporated.
Julie L. Daly, age 41, has been the Vice President - Planning
and Distribution of United Retail Incorporated since May 1991, and previously
was employed by United Retail Incorporated in merchandise planning positions
since before 1991.
Kent Frauenberger, age 49, has been the Vice President -
Logistics of United Retail Logistics Operations Incorporated, a subsidiary of
the registrant, since May l993. Previously, he was Manager of Business
Development of Exel Logistics Inc., a logistics firm, through 1992. Previously,
he was Director of Distribution of Mervyns, a division of Dayton Hudson Corp., a
retail store chain, since before 1991.
Jon Grossman, age 38, has been the Vice President - Finance of
the Company since May 1992. Previously, he served the Company as its Director of
Financial Reporting since before 1991.
Alan R. Jones, age 48, has been the Vice President - Real
Estate of United Retail Incorporated since November 1994. Previously, he was
Vice President - Real Estate of Payless Shoesource, a division of May Department
Stores, Inc., since before 1991.
Bradley Orloff, age 38, has been the Vice President -
Marketing of United Retail Incorporated since May 1991. He previously served
United Retail Incorporated in marketing positions since before 1991.
Robert Portante, age 44, has been the Vice President - MIS of
United Retail Incorporated since November 1994. Previously, he was Vice
President - MIS of Brooks Fashion Stores, Inc. ("Brooks"), a retail store chain,
since May 1991. Brooks filed as debtor in possession under the United States
Bankruptcy Code. Previously, he was Director - MIS of Brooks since before 1991.
Fredric E. Stern, age 46, has been the Vice President -
Controller of United Retail Incorporated since before 1991.
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John I. Trombley, age 47, has been the Vice President - Store
Design and Construction of United Retail Incorporated since August 1994.
Previously, he was Vice President - Store Planning of The Limited since before
1991.
The term of office of these executive officers will expire at
the 1996 annual meeting of stockholders, scheduled to be held in May 1996.
The subsection captioned "Section 16(b) Filings" in the Proxy
Statement is incorporated herein by reference.
Item 11. Executive Compensation.
The sections captioned "Executive Compensation" and "Report of
Compensation Committee" in the Proxy Statement are incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The section captioned "Security Ownership of Principal
Stockholders and Management" in the Proxy Statement is incorporated herein by
reference.
Item 13. Certain Relationships and Related Transactions.
The sections captioned "Certain Transactions" and
"Compensation Committee Interlocks and Insider Participation" in the Proxy
Statement are incorporated herein by reference.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K.
The following financial statement schedule is filed herewith:
Schedule Description
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II Valuation of Qualifying Accounts and Reserves
The following exhibits are filed herewith:
Number Description
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13 Sections of 1995 Annual Report to Stockholders
(including opinion of Independent Public Accountants)
that are incorporated by reference in response to the
items of the Annual Report on Form 10-K
23.1 Consent of Independent Public Accountants for the
registrant
23.2 Opinion of Independent Public Accountants on
financial statement schedule
27 Financial Data Schedule
The registrant's proxy statement on Schedule 14A for its 1996 annual meeting of
stockholders is incorporated herein by reference.
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The following exhibits to the registrant's Current Report on Form 8-K, dated
March 22, 1996, are incorporated herein by reference:
Number Description
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10.1 Amendment No. 7, dated March 5, 1996, to
Letter of Credit Agreement among the
Corporation, its subsidiaries and The Chase
Manhattan Bank (N.A.) ("Chase")
10.2 Amendment No. 6, dated March 5, 1996, to the
Credit Agreement among the Corporation, its
subsidiaries and Chase
10.3* Employment Agreement, dated March 1, 1996 ,
between the Corporation and Kenneth P.
Carroll
The following exhibits to the registrant's Quarterly Report on Form 10-Q for the
period ended July 29, 1995 are incorporated herein by reference:
Number in Filing Description
---------------- -----------
10.1 Amendment No. 5, dated January 31, 1995, to
the Credit Agreement among the Corporation,
its subsidiaries and Chase
10.2 Amendment No. 6, dated January 31, 1995, to
the Letter of Credit Agreement among the
Corporation, its subsidiaries and Chase
The following exhibits to the registrant's Amended Current Report on Form 8-KA,
dated May 22, 1995, are incorporated herein by reference:
Number in Filing Description
---------------- -----------
10.1 Amended and Restated Gloria Vanderbilt
Intimate Apparel Sublicense Agreement, dated
May 22, 1995, between United Retail
Incorporated and American Licensing Group
Limited Partnership ("ALGLP")
10.2 Gloria Vanderbilt Sleepwear Sublicense
Agreement, dated May 22, 1995, between
United Retail Incorporated and ALGLP
The following exhibits to the registrant's Annual Report on Form 10-K for the
year ended January 28, 1995 are incorporated herein by reference:
Number in Filing Description
---------------- -----------
10.1* Incentive Compensation Program Summary
21 Subsidiaries of the Corporation
The following exhibits to the registrant's Quarterly Report on Form 10-Q for the
period ended October 29, 1994 are incorporated herein by reference:
Number in Filing Description
---------------- -----------
10.1* Restated Retirement Savings Plan
10.2* Restated Supplemental Retirement Savings
Plan
<PAGE> 12
The following exhibit to the registrant's Quarterly Report on Form 10-Q for the
period ended July 30, 1994 is incorporated herein by reference:
Number in Filing Description
----------------- -----------
l0.2* Letter from the Corporation to Raphael
Benaroya and George R. Remeta, dated May 20,
1994, regarding their respective Restated
Employment Agreements, dated November 1,
1991
The following exhibits to the registrant's amended Annual Report on Form 10-KA
for the year ended January 29, 1994 are incorporated herein by reference:
Number in Filing Description
---------------- -----------
10.3 Amendment, dated December 6, 1993, to Credit
Agreement between the Corporation and
Citibank (South Dakota) N.A.
10.4 Term Sheet Agreement, dated as of May 4,
1993, with respect to Amended and Restated
Gloria Vanderbilt Hosiery Sublicense
Agreement
The following exhibits to the registrant's Quarterly Report on Form 10-Q for the
period ended July 31, 1993 are incorporated herein by reference:
Number in Filing Description
---------------- -----------
4.1 Amended By-Laws of the Corporation, as
amended June 1, 1993
4.2 Amendment No. 1, dated June 1, 1993, to
Restated Stockholders' Agreement
The following exhibit to the registrant's proxy statement on Schedule 14A for
its 1993 annual meeting of stockholders is incorporated herein by reference:
Restated 1990 Stock Option Plan*
The following exhibits to the registrant's Current Report on Form 8-K, dated
January 6, 1993, are incorporated herein by reference:
Number in Filing Description
---------------- -----------
4.2 Restated Stockholders' Agreement, dated
December 23, 1992, between the Corporation
and certain of its stockholders
10.1 Amendment No. 1, dated March 17, 1992, to
Letter of Credit Agreement between the
Corporation, its subsidiaries and Chase
10.2 Amendment No. 2, dated May 4, 1992, to
Letter of Credit Agreement between the
Corporation its subsidiaries and Chase
10.3 Amendment No. 3, dated July 2, 1992, to
Letter of Credit Agreement between the
Corporation , its subsidiaries and Chase
10.4 Amendment No. 1, dated May 4, 1992, to
Credit Agreement between the Corporation,
its subsidiaries and Chase
10.5 Amendment No. 2, dated July 2, 1992, to
Credit Agreement between the Corporation,
its subsidiaries and Chase
<PAGE> 13
10.6 Second Amendment to Lease, dated June 30,
1992, to Office Lease between Mack Passaic
Street Properties Co. and Sizes Unlimited,
Inc. (now known as United Retail
Incorporated)
10.7 Guaranty of Lease, dated June 30, 1992, made
by Sizes Unlimited Holding Corporation (now
known as United Retail Holding Corporation)
to Mack Passaic Street Properties Co.
The following exhibits to the registrant's Registration Statement on Form S-1
(Registration No. 33-44499), as amended, are incorporated herein by reference:
Number in Filing Description
---------------- -----------
2.1 Acquisition Agreement, dated as of July 14,
1989, between The Limited, Inc. and Sizes
Unlimited Acquisition Corporation
3.1 Amended and Restated Certificate of
Incorporation of Registrant
4.1 Specimen Certificate for Common Stock of
Registrant
10.2.1 Software License Agreement, dated as of
April 30, 1989, between The Limited Stores,
Inc. and Sizes Unlimited, Inc.
10.2.2 Amendment to Software License Agreement,
dated December 10, 1991
10.3.1 Merchandise Handling Agreement, dated as of
April 30, 1989, among The Limited Stores,
Inc., Limited Express, Inc. and Sizes
Unlimited, Inc. and Amendment thereto, dated
October 4, 1990
10.3.2 Amendment, dated December 30, 1991, to
Merchandise Handling Agreement
10.7 Amended and Restated Gloria Vanderbilt
Hosiery Sublicense Agreement, dated as of
April 30, 1989, between American Licensing
Group, Inc. (also known as Oldco, Inc.)
(Licensee) and Sizes Unlimited, Inc.
(Sublicensee)
10.11 Office Lease, dated June 12, 1987, between
Mack Passaic Street Properties Co. and Sizes
Unlimited, Inc. and Amendment thereto dated
August 21, 1988
10.12 Amended and Restated Master Affiliate
Sublease Agreement, dated as of July 17,
1989, among Lane Bryant, Inc., Lerner
Stores, Inc. (Landlord) and Sizes Unlimited,
Inc. (Tenant) and Amendment thereto, dated
July 17, 1989
10.23* Restated Employment Agreement, dated
November 1, 1991, between the Corporation
and Raphael Benaroya
10.25* Restated Employment Agreement, dated
November 1, 1991, between the Corporation
and George R. Remeta
10.29* Restated 1989 Management Stock Option Plan,
dated November 1, 1991
10.30* Performance Option Agreement, dated July 17,
1989, between Lernmark, Inc. and Raphael
Benaroya and First Amendment thereto dated
November 1, 1991
10.31* Performance Option Agreement, dated July 17,
1989, between Lernmark, Inc. and George R.
Remeta and First Amendment thereto dated
November 1, 1991
10.32* Second Amendment, dated November 1, 1991, to
Performance Option Agreements with Raphael
Benaroya and George R. Remeta
10.33* 1991 Stock Option Agreement, dated November
1, 1991, between the Corporation and Raphael
Benaroya
10.34* 1991 Stock Option Agreement, dated November
1, 1991, between the Corporation and George
R. Remeta
10.38 Management Services Agreement dated August
26, 1989 between American Licensing Group,
Inc. and ALGLP
<PAGE> 14
10.39 First Refusal Agreement dated as of August
31, 1989 between the Corporation and ALGLP
10.40 Credit Agreement, dated as of February 24,
1992, among the Corporation, its
subsidiaries and Chase
10.41 Letter of Credit Agreement, dated as of
February 24, 1992, among the Corporation,
its subsidiaries and Chase
The following exhibits to the registrant's Quarterly Report on Form 10-Q for the
period ended October 30, 1993 are incorporated herein by reference:
Number in Filing Description
---------------- -----------
10.1 Amendment Nos. 3 and 4, dated September 30,
1993 and November 18, 1993, respectively, to
Credit Agreement among the Corporation, its
subsidiaries and Chase
10.2 Amendment Nos. 4 and 5, dated September 30,
1993 and November 18, 1993, respectively, to
Letter of Credit Agreement among the
Corporation, its subsidiaries and Chase
- -------------------------
*A compensatory plan for the benefit of the registrant's management or
a management contract.
- -------------
(b) No Current Reports on Form 8-K were filed by the registrant during
the fiscal quarter ended February 3, 1996.
<PAGE> 15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
(Registrant) UNITED RETAIL GROUP, INC.
---------------------------------------------------
By: /s/ RAPHAEL BENAROYA
---------------------------------------------
Raphael Benaroya, Chairman of the Board,
President and Chief Executive Officer
Date: April 11, 1996
--------------
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ RAPHAEL BENAROYA
- ----------------------------
Raphael Benaroya Chairman of the Board, April 11, 1996
Principal Executive Officer President, Chief Executive
Officer and Director
/s/ GEORGE R. REMETA
- ----------------------------
George R. Remeta Vice Chairman, April 11, 1996
Principal Financial Officer Chief Financial Officer,
Secretary and Director
/s/ JON GROSSMAN
- ----------------------------
Jon Grossman Vice President - Finance April 11, 1996
Principal Accounting Officer
/s/ JOSEPH A. ALUTTO
- ----------------------------
Joseph A. Alutto Director April 11, 1996
/s/ RUSSELL BERRIE
- ----------------------------
Russell Berrie Director April 11, 1996
/s/ JOSEPH CIECHANOVER
- ----------------------------
Joseph Ciechanover Director April 11, 1996
/s/ ILAN KAUFTHAL
- ----------------------------
Ilan Kaufthal Director April 11, 1996
/s/ VINCENT LANGONE
- ----------------------------
Vincent Langone Director April 11, 1996
/s/ CHRISTINA A. MOHR
- ----------------------------
Christina A. Mohr Director April 11, 1996
/s/ RICHARD W. RUBENSTEIN
- ----------------------------
Richard W. Rubenstein Director April 11, 1996
<PAGE> 16
UNITED RETAIL GROUP, INC. AND SUBSIDIARIES SCHEDULE II
AMOUNTS RECEIVABLE FROM OFFICERS
(dollars in thousands)
<TABLE>
<CAPTION>
Balance at End of
Deductions Period
----------------------- -----------------
Balance at
Beginning Amounts Amounts Non-
of Period Additions Collected Written Off Current Current
---------- --------- --------- ----------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Charles R. Wilkinson (1)
For the fiscal year ended January 29, 1994 $ 0 $ 0 $ 0 $0 $0 $ 0
==== ==== === == == ====
For the fiscal year ended January 28, 1995 $ 0 $189 $ 1 $0 $0 $188
==== ==== === == == ====
For the fiscal year ended February 3, 1996 $188 $ 19 $18 $0 $0 $189
==== ==== === == == ====
</TABLE>
(1) The loan bore interest at Prime plus 1%.
<PAGE> 17
UNITED RETAIL GROUP, INC. EXHIBIT INDEX
The following exhibits are filed herewith:
<TABLE>
<CAPTION>
Number Description
------ -----------
<S> <C>
13 Sections of 1995 Annual Report to Stockholders
that are incorporated by reference in response to
the items of the Annual Report on Form 10-K
23.1 Consent of Independent Public Accountants for
the registrant
23.2 Opinion of Independent Public Accountants on
financial statement schedule
27 Financial Data Schedule
The following financial statement schedule is filed herewith:
<CAPTION>
Schedule Description
-------- -----------
<S> <C>
II Valuation of Qualifying Accounts and
Reserves
The registrant's proxy statement on Schedule 14A for its 1996 annual meeting of
stockholders is incorporated herein by reference.
The following exhibits to the registrant's Current Report on Form 8-K, dated
March 22, 1996, are incorporated herein by reference:
<CAPTION>
Number Description
------ -----------
<S> <C>
10.1 Amendment No. 7, dated March 5, 1996, to Letter of
Credit Agreement among the Corporation, its
subsidiaries and The Chase Manhattan Bank (N.A.)
("Chase")
10.2 Amendment No. 6, dated March 5, 1996, to the
Credit Agreement among the Corporation, its
subsidiaries and Chase
10.3* Employment Agreement, dated March 1, 1996 between
the Corporation and Kenneth P. Carroll
The following exhibits to the registrant's Quarterly Report on Form 10-Q for the
period ended July 29, 1995 are incorporated herein by reference:
<CAPTION>
Number in Filing Description
---------------- -----------
<S> <C>
10.1 Amendment No. 5, dated January 31, 1995, to the
Credit Agreement among the Corporation, its
subsidiaries and Chase
10.2 Amendment No. 6, dated January 31, 1995, to the
Letter of Credit Agreement among the Corporation,
its subsidiaries and Chase
The following exhibits to the registrant's Amended Current Report on Form 8-KA,
dated May 22, 1995, are incorporated herein by reference:
<CAPTION>
Number in Filing Description
<S> <C>
10.1 Amended and Restated Gloria Vanderbilt Intimate
Apparel Sublicense Agreement, dated May 22, 1995,
between United Retail Incorporated and American
Licensing Group Limited Partnership ("ALGLP")
</TABLE>
<PAGE> 18
10.2 Gloria Vanderbilt Sleepwear Sublicense Agreement,
dated May 22, 1995, between United Retail
Incorporated and ALGLP
The following exhibits to the registrant's Annual Report on Form 10-K for the
year ended January 28, 1995 are incorporated herein by reference:
Number in Filing Description
10.1* Incentive Compensation Program Summary
21 Subsidiaries of the Corporation
The following exhibits to the registrant's Quarterly Report on Form 10-Q for the
period ended October 29, 1994 are incorporated herein by reference:
Number in Filing Description
10.1* Restated Retirement Savings Plan
10.2* Restated Supplemental Retirement Savings Plan
The following exhibit to the registrant's Quarterly Report on Form 10-Q for the
period ended July 30, 1994 is incorporated herein by reference:
Number in Filing Description
l0.2* Letter from the Corporation to Raphael Benaroya
and George R. Remeta, dated May 20, 1994,
regarding their respective Restated Employment
Agreements, dated November 1, 1991
The following exhibits to the registrant's amended Annual Report on Form 10-KA
for the year ended January 29, 1994 are incorporated herein by reference:
Number in Filing Description
10.3 Amendment, dated December 6, 1993, to Credit
Agreement between the Corporation and Citibank
(South Dakota) N.A.
10.4 Term Sheet Agreement, dated as of May 4, 1993,
with respect to Amended and Restated Gloria
Vanderbilt Hosiery Sublicense Agreement
The following exhibits to the registrant's Quarterly Report on Form 10-Q for the
period ended July 31, 1993 are incorporated herein by reference:
Number in Filing Description
4.1 Amended By-Laws of the Corporation, as amended
June 1, 1993
4.2 Amendment No. 1, dated June 1, 1993, to Restated
Stockholders' Agreement
The following exhibit to the registrant's proxy statement on Schedule 14A for
its 1993 annual meeting of stockholders is incorporated herein by reference:
Restated 1990 Stock Option Plan*
<PAGE> 19
The following exhibits to the registrant's Current Report on Form 8-K, dated
January 6, 1993, are incorporated herein by reference:
Number in Filing Description
4.2 Restated Stockholders' Agreement, dated December
23, 1992, between the Corporation and certain of
its stockholders
10.1 Amendment No. 1, dated March 17, 1992, to Letter
of Credit Agreement between the Corporation, its
subsidiaries and Chase
10.2 Amendment No. 2, dated May 4, 1992, to Letter of
Credit Agreement between the Corporation , its
subsidiaries and Chase
10.3 Amendment No. 3, dated July 2, 1992, to Letter of
Credit Agreement between the Corporation , its
subsidiaries and Chase
10.4 Amendment No. 1, dated May 4, 1992, to Credit
Agreement between the Corporation , its
subsidiaries and Chase
10.5 Amendment No. 2, dated July 2, 1992, to Credit
Agreement between the Corporation, its
subsidiaries and Chase
10.6 Second Amendment to Lease, dated June 30, 1992, to
Office Lease between Mack Passaic Street
Properties Co. and Sizes Unlimited, Inc. (now
known as United Retail Incorporated)
10.7 Guaranty of Lease, dated June 30, 1992, made by
Sizes Unlimited Holding Corporation (now known as
United Retail Holding Corporation) to Mack Passaic
Street Properties Co.
The following exhibits to the registrant's Registration Statement on Form S-1
(Registration No. 33-44499), as amended, are incorporated herein by reference:
Number in Filing Description
2.1 Acquisition Agreement, dated as of July 14, 1989,
between The Limited, Inc. and Sizes Unlimited
Acquisition Corporation
3.1 Amended and Restated Certificate of Incorporation
of Registrant
4.1 Specimen Certificate for Common Stock of
Registrant
10.2.1 Software License Agreement, dated as of April 30,
1989, between The Limited Stores, Inc. and Sizes
Unlimited, Inc.
10.2.2 Amendment to Software License Agreement, dated
December 10, 1991
10.3.1 Merchandise Handling Agreement, dated as of April
30, 1989, among The Limited Stores, Inc., Limited
Express, Inc. and Sizes Unlimited, Inc. and
Amendment thereto, dated October 4, 1990
10.3.2 Amendment, dated December 30, 1991, to Merchandise
Handling Agreement
10.7 Amended and Restated Gloria Vanderbilt Hosiery
Sublicense Agreement, dated as of April 30, 1989,
between American Licensing Group, Inc. (also
known as Oldco, Inc.) (Licensee) and Sizes
Unlimited, Inc. (Sublicensee)
10.11 Office Lease, dated June 12, 1987, between Mack
Passaic Street Properties Co. and Sizes Unlimited,
Inc. and Amendment thereto dated August 21, 1988
10.12 Amended and Restated Master Affiliate Sublease
Agreement, dated as of July 17, 1989, among Lane
Bryant, Inc., Lerner Stores, Inc. (Landlord) and
Sizes Unlimited, Inc. (Tenant) and Amendment
thereto, dated July 17, 1989
10.23* Restated Employment Agreement, dated November 1,
1991, between the Corporation and Raphael Benaroya
<PAGE> 20
10.25* Restated Employment Agreement, dated November 1,
1991, between the Corporation and George R. Remeta
10.29* Restated 1989 Management Stock Option Plan, dated
November 1, 1991
10.30* Performance Option Agreement, dated July 17, 1989,
between Lernmark, Inc. and Raphael Benaroya and
First Amendment thereto dated November 1, 1991
10.31* Performance Option Agreement, dated July 17, 1989,
between Lernmark, Inc. and George R. Remeta and
First Amendment thereto dated November 1, 1991
10.32* Second Amendment, dated November 1, 1991, to
Performance Option Agreements with Raphael
Benaroya and George R. Remeta
10.33* 1991 Stock Option Agreement, dated November 1,
1991, between the Corporation and Raphael Benaroya
10.34* 1991 Stock Option Agreement, dated November 1,
1991, between the Corporation and George R. Remeta
10.38 Management Services Agreement, dated August 26,
1989, between American Licensing Group, Inc. and
ALGLP
10.39 First Refusal Agreement, dated as of August 31,
1989, between the Corporation and ALGLP
10.40 Credit Agreement, dated as of February 24, 1992,
among the Corporation, its subsidiaries and Chase
10.41 Letter of Credit Agreement, dated as of February
24, 1992, among the Corporation, its subsidiaries
and Chase
The following exhibits to the registrant's Quarterly Report on Form 10-Q for the
period ended October 30, 1993 are incorporated herein by reference:
Number in Filing Description
10.1 Amendment Nos. 3 and 4, dated September 30, 1993
and November 18, 1993, respectively, to Credit
Agreement among the Corporation, its subsidiaries
and Chase
10.2 Amendment Nos. 4 and 5, dated September 30, 1993
and November 18, 1993, respectively, to Letter of
Credit Agreement among the Corporation, its
subsidiaries and Chase
- -------------------------
*A compensatory plan for the benefit of the registrant's management or
a management contract.
- -------------
<PAGE> 1
EXHIBIT 13
UNITED RETAIL GROUP, INC. is a leading specialty retailer of private label
large-size women's apparel and accessories, operating 576 stores in 37 states.
The Company seeks to create a fashion-current, upscale image at prices that
appeal to the middle mass market.
[THE AVENUE LOGO]
[SIZES UNLIMITED LOGO]
[1416 PLUS LOGO]
UNITED RETAIL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Fiscal Fiscal
1994 1995
- ----------------------------------------------------------------
<S> <C> <C>
Net sales $357,684 $369,173
Income (loss) before income taxes 6,169 (3,668)
Provision (benefit) for income taxes 2,276 (957)
Provision for write-down of the
compensation related deferred
tax asset 917 1,928
Net income (loss) 2,976 (4,639)
Net income (loss) per common share 0.22 (0.38)
Net income (loss) excluding the
deferred tax asset write-down:
Net income (loss) 3,893 (2,711)
Net income (loss) per common share 0.29 (0.22)
Weighted average outstanding shares
(in thousands) 13,313 12,190
Stores open at end of period 532 576
- ----------------------------------------------------------------
</TABLE>
2
<PAGE> 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FISCAL 1995 VERSUS FISCAL 1994
Net sales for Fiscal 1995 increased 3.2% from Fiscal 1994, to
$369.2 million from $357.7 million, principally from an increase
in sales volume rather than price changes. Average stores open
increased from 518 to 552; see, however, "Properties," regarding
the Company's plan for future store openings. (Net sales for the
months of February 1996 and March 1996, combined, increased 5.6%
from the same period in 1995 to $58.2 million from $55.1
million.) There is no assurance that sales will continue to
increase. The women's apparel industry is subject to rapidly
changing consumer fashion preferences. The Company's performance
depends on the operational flexibility to respond to such
changes quickly. See, also, "A Single Merchandise Assortment in
Mid-Spring 1996." The industry is also subject to shifting
shopping patterns, both within the Company's sector (the
specialty store sector) and in other channels of distribution,
such as department stores, catalogues and electronic media.
Finally, the Company's sales are affected by economic conditions
and the location and severity of major storms.
Comparable store sales decreased 1.9% for Fiscal 1995
(comparable store sales decreased 0.4% for February 1996 and
March 1996, combined, even though the period included Easter
Week, which occurred in April in the previous year). There is no
assurance that comparable store sales will not continue to
decrease. Frequent snow storms before Christmas, economic
conditions, and other temporary external factors are believed to
have contributed to the decrease in comparable store sales. The
Company also believes that the search by consumers for lower
prices throughout the specialty apparel industry has become a
permanent influence on the retail marketplace. Finally, the
Company believes that poor execution of its merchandise planning
and selection processes, which resulted in weak merchandise
assortments for the year, also contributed to the decrease in
comparable store sales. See, also, "A Single Merchandise
Assortment in Mid-Spring 1996."
Gross profits decreased by $5.3 million to $76.4 million in
Fiscal 1995 from $81.6 million in Fiscal 1994, decreasing as a
percentage of net sales to 20.7% from 22.8%. The decrease in
gross profits as a percentage of net sales was primarily
attributable to a decrease in the merchandise margin rate and
higher occupancy costs as a percentage of net sales. The Company
expects that in the long term consumer pressure to reduce prices
will continue, making it necessary for the Company to increase
productivity, continue to reduce costs and offer added value
merchandise in order to increase profit margins. There is no
assurance that gross profits will not continue to decrease.
General, administrative and store operating expenses were $80.2
million in Fiscal 1995, compared to $75.0 million in the
previous year, principally from higher payroll costs, resulting
principally from an increase in the number of stores; see,
"Properties." As a percentage of net sales, general,
administrative and store operating expenses increased to 21.7%
from 21.0%.
During Fiscal 1995, the Company incurred an operating loss of
$3.8 million compared to operating income of $6.7 million for
Fiscal 1994. The operating loss was 1.0% of net sales. There is
no assurance that the Company will not continue to incur
operating losses.
Net interest income was $0.1 million for Fiscal 1995, compared
to net interest expense of $0.5 million in Fiscal 1994,
principally as a result of mortgage origination fees in Fiscal
1994 that were not incurred in Fiscal 1995.
7
<PAGE> 3
The Company had an income tax benefit of $1.0 million in Fiscal
1995 and a provision for income taxes of $2.3 million in Fiscal
1994. In addition, there were provisions for write-downs of
certain future tax benefits explained below.
As part of certain non-recurring charges in Fiscal 1992, the
Company incurred a non-cash compensation expense of $15.6
million because the stock options ("Performance Options")
previously granted to Raphael Benaroya, Chairman of the Board,
President and Chief Executive Officer of the Company, and George
R. Remeta, Vice Chairman and Chief Financial Officer of the
Company, vested in March 1992 and became exercisable until
December 1999. The non-cash compensation expense resulted in the
recognition of certain future tax benefits realizable at the
time Performance Options are exercised based on an assumption
that the market price of the Common Stock at the time of
exercise will be $15 per share (the price of the initial public
offering in March 1992). The write-downs occurred because the
market price of Common Stock at the end of Fiscal 1994 and
Fiscal 1995, respectively, was $8 and $3.875, respectively, and
the future tax benefits had been based on an assumed market
price of $15 per share. The write-down of the compensation
related deferred tax asset was $0.9 million in Fiscal 1994 and
$1.9 million in Fiscal 1995.
The Company incurred a net loss of $4.6 million for Fiscal 1995,
compared to net income of $3.0 million for Fiscal 1994.
Excluding the unusual write-downs referred to above, the Company
would have incurred a net loss of $2.7 million in Fiscal 1995
and would have had net income of $3.9 million in Fiscal 1994.
(The Company is not likely to be profitable in the first quarter
of Fiscal 1996.)
FISCAL 1994 VERSUS FISCAL 1993
Net sales for Fiscal 1994 increased 4.0% from Fiscal 1993 to
$357.7 million from $344.1 million, principally from an increase
in sales volume rather than price changes. Average stores open
increased from 501 to 518.
Comparable store sales for Fiscal 1994 increased 0.2%.
Gross profits decreased by $0.5 million to $81.6 million in
Fiscal 1994 from $82.2 million in the previous year, declining
as a percentage of net sales to 22.8% from 23.9%. The decrease
in gross profits as a percentage of net sales was primarily
attributable to a decrease in the merchandise margin rate and
higher occupancy costs as a percentage of net sales.
General, administrative and store operating expenses were $75.0
million in Fiscal 1994 compared to $75.7 million in the previous
year. As a percentage of net sales, general, administrative and
store operating expenses decreased to 21.0% from 22.0%,
principally from lower distribution center and logistics
expenses.
During Fiscal 1994, the Company had operating income of $6.7
million compared to operating income of $6.4 million for the
previous year.
Net interest expense was $0.5 million for Fiscal 1994, compared
to net interest income of $0.1 million in the previous year as a
result of increased distribution center financing and related
origination fees.
The Company had a provision for income taxes of $2.3 million in
Fiscal 1994 and $2.5 million for the previous year. In
addition, there were provisions for write-downs of the
compensation related deferred tax asset of $0.9 million in
Fiscal 1994 and $2.5 million in the previous year.
The Company had net income of $3.0 million for Fiscal 1994 and
$1.6 million in the previous year. Excluding the unusual
write-downs referred to above, the Company's net income would
have been $3.9 million in Fiscal 1994 and $4.0 million in the
previous year.
8
<PAGE> 4
A SINGLE MERCHANDISE ASSORTMENT COMMENCING IN MID-SPRING 1996
The Company's merchandising strategy was to have one team of
merchants providing inventory for stores in malls and a separate
team of merchants providing different inventory for stores in
strip shopping centers. This strategy was changed in the third
quarter of Fiscal 1995. The separate teams of merchants for mall
stores and strip shopping center stores were unified. A single
team with more specialized functions will provide the same
inventory for all the Company's stores. The first unified
merchandise assortment will arrive in Mid-Spring 1996. The new
assortment will put greater emphasis on The Avenue(R) label than
on Forelli(R) and Adrian Jordan(R) labels.
The new unified merchandising structure has three specialized
components: product development, product quality and
merchandising. Product development is a new function that is
responsible for fashion content and design. The expanded product
quality function is responsible for product specifications, for
vendor qualifications and for quality control, both
pre-production and upon delivery to the national distribution
center. The merchandising function continues to be responsible
for building assortments, for purchasing and for retail pricing.
The change from a larger divisional structure employing
generalists to a smaller unified team relying on specialists is
a strategic move in response to our view of long term trends in
the marketplace. The goal is to improve the fashion, increase
the quality and lower the cost of the Company's merchandise
assortments.
The Company-wide merchandising function and the expanded product
quality function have been staffed from within. The Company is
recruiting experienced senior personnel for the product
development function but there is no assurance that they will be
available promptly.
The unification and specialization of the merchandising function
caused the separation of approximately 20 associates from the
Company's employ, including the general merchandise manager of
the mall stores. Product development specialists who are being
recruited will partially offset the number of associate
departures.
The Company's new merchandising structure involved a realignment
of management responsibilities, reassignments of merchants and
planners, the voluntary resignation of certain merchants and the
layoff of others. The Fall 1995 season was a transitional period
for the merchandising function that had an adverse effect on
sales and merchandise margin rates. There is no assurance that
the new merchandising structure will increase sales and improve
merchandise margin rates.
Economies of scale are expected to result from having a single
merchandise assortment and fewer merchants. Savings were not the
objective of the new structure, however, and may not be
material. Moreover, the Company intends to improve product
quality and marketing and any savings from the restructuring may
be offset by the increased cost of higher product quality and
better marketing.
9
<PAGE> 5
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash on hand was $16.8 million at February 3, 1996
and $18.5 million at January 28, 1995. At February 3, 1996,
there was an income tax refund receivable in the amount of $2.7
million. Net cash provided by operating activities for Fiscal
1995 was $8.7 million.
Inventory increased from $37.5 million at January 28, 1995 to
$40.4 million at February 3, 1996, as a result of an 8% increase
in retail square footage. The Company's inventory levels peak in
early May and December. During Fiscal 1995, the highest
inventory level was $54.9 million. Import purchases are made in
U.S. dollars and are generally financed by trade letters of
credit. Short-term trade credit represents a significant source
of financing for domestic merchandise purchases. Trade credit
arises from the willingness of the Company's domestic vendors to
grant extended payment terms for inventory purchases and is
generally financed either by the vendor or a third-party factor.
In Fiscal 1995, domestic purchases and import purchases each
constituted one-half of total purchases.
In March 1996, the Company and The Chase Manhattan Bank (N.A.)
("Chase") amended agreements (as amended, the "Chase
Agreements") providing two credit facilities and extended the
term of each to February 1999. The first facility under the
Letter of Credit Agreement now provides for the issuance by
Chase of trade letters of credit for the account of the Company
in an aggregate amount at any time of up to $25.0 million, of
which $13.9 million was utilized at February 3, 1996. The second
facility under the Credit Agreement now provides for revolving
credit loans totaling a maximum of $15.0 million, of which up to
$10.0 million would be available for standby letters of credit
for general corporate purposes. The credit facilities continue
to be collateralized by a pledge of the stock of the Company's
subsidiaries. Merchandise being purchased under outstanding
trade letters of credit is subject to a security interest
pursuant to the Letter of Credit Agreement. Loans under the
revolving credit facility will bear interest, at the option of
the Company, at either (i) the higher of the Federal Funds Rate
plus 0.5% or the prime commercial lending rate of Chase, or (ii)
the London Interbank Offered Rate plus 1.5%. The Company has not
drawn upon its revolving credit facility since its inception
except to issue standby letters of credit totaling $4.5 million
at February 3, 1996 as collateral for obligations in the
ordinary course of business under casualty insurance policies.
The Chase Agreements contain a number of financial covenants,
including (i) tangible net worth to equal at least $73.0 million
plus, for each fiscal year ending after February 3, 1996, for
which net income shall be positive, an amount equal to 50% of
net income, and (ii) capital expenditures not to exceed $10.0
million per annum plus, during the period from February 4, 1996
the sum of (A) $10.0 million plus (B) if adjusted cash flow (as
defined in the Chase Agreements) is positive, 75% of adjusted
cash flow for the period. The Chase Agreements also require: (i)
the ratio of total debt (excluding accrued and payable expenses
incurred in the ordinary course of business) to tangible net
worth not be .45 to 1.0 or more, (ii) the fixed charges ratio
(as defined in the Chase Agreements) not be less than 1.0 to
1.0, and (iii) the ratio of current assets to current
liabilities not be less than 1.25 to 1.0. The Chase Agreements
also include certain restrictive covenants that impose
limitations (subject to certain exceptions) on the Company with
respect to, among other things, (i) making or owning certain
investments, declaring or paying dividends, acquiring Common
Stock or preferred stock of the Company, or making loans,
involving more than $5 million in the aggregate of investments,
dividends, purchase prices and loan proceeds, (ii) engaging in
any line of business other than apparel retailing, (iii)
engaging in certain transactions with affiliates and (iv)
consolidating, merging or making acquisitions outside the
ordinary course of business involving assets with a value in
excess of $5 million. The Company does not believe that
continued compliance with the covenants under the Chase
Agreements will materially restrict its anticipated operations.
It would constitute an event of
10
<PAGE> 6
default under the Chase Agreements if a majority of the
Company's outstanding Common Stock were to be held by one
person, or an investment group, other than an affiliate of The
Limited, Inc. or Raphael Benaroya, the Chairman of the Board,
President and Chief Executive Officer of the Company.
The Company believes that its credit facilities, together with
cash flows from operating activities, will be adequate to meet
anticipated working capital needs, including seasonal financing
needs, for the next 12 months.
The accounts receivable from the Company's proprietary credit
cards are purchased daily by Citibank (South Dakota), N.A.
("Citibank") at a discount ("Discount") that is adjusted
annually. There is no assurance that the annual adjustment in
the discount rate will not increase materially the cost of the
Company's proprietary credit card programs. The Credit Agreement
between the Company and Citibank (as amended in December 1993,
the "Citibank Agreement") provides that either party may
terminate the Citibank Agreement effective on January 30, 1999
upon notice of not less than one year and not more than two
years. Upon termination of the Citibank Agreement, the Company
at its option shall either (i) arrange for a bank to purchase
all unpaid indebtedness ("Receivables") to Citibank of charge
customers of the Company that has not been written off by
Citibank, or (ii) compensate Citibank for (y) that portion of
its costs incurred in billing and collecting the Receivables
after termination which would have been recovered by Citibank
out of the Discount and finance charges if the Citibank
Agreement had not been terminated, and (z) net credit losses (as
defined in the Citibank Agreement) incurred after termination
at a percentage rate in excess of net credit losses incurred
during the 12 months prior to termination. At February 29, 1996,
Receivables were approximately $62 million. The Citibank
Agreement contains covenants by the Company, including financial
covenants requiring the Company to comply with the fixed charges
ratio (as contained in the Chase Agreements) and not to permit
tangible net worth (as defined in the Chase Agreements) to be
less than the sum of $32 million plus, for each fiscal year
ending after February 1, 1992, for which net income shall be
positive, an amount equal to 50% of net income. Citibank is
entitled to terminate the Citibank Agreement prior to January
30, 1999 in the event the Company breaches one or more of its
covenants, provided, however, that, if the breach involves the
financial covenants only, Citibank shall not terminate the
Citibank Agreement if the Company posts collateral, subject to a
maximum amount of collateral equal to 10% of the Receivables.
Overseas production of merchandise purchased by the Company is
mainly in the Far East and South Asia and is obtained through
independent agents. The Company's operations may be adversely
affected by political instability resulting in disruption of
trade with foreign countries in which the Company's foreign
suppliers are located, the adoption of additional regulations
relating to imports or duties, the imposition of taxes or other
charges on imports, any significant fluctuation of the value of
the dollar against foreign currencies, and restrictions on the
transfer of funds.
PROPERTIES
The Company leased 576 retail stores at February 3, 1996, of
which 303 stores were located in strip shopping centers, 243
stores were located in malls and 30 stores were located in
downtown shopping districts. In Fiscal 1995, the Company
increased its retail square footage to 2.2 million square feet,
an increase of 8% that included 21 closed retail stores that
were formerly operated by another chain of specialty apparel
retail stores and were reopened by the Company. The increase in
retail square footage led to an increase in net sales.
The Company presently plans to maintain its retail square
footage at approximately 2.2 million square feet and to obtain
further increases in net sales from higher sales per square
foot. There is no
11
<PAGE> 7
assurance, however, that net sales will continue to
increase. The Company plans to open new mall stores only in
exceptional circumstances and to decrease the retail square
footage in mall locations gradually by letting underperforming
leases expire. Subject to space availability, the Company plans
to open stores in strip shopping centers to replace mall stores
that close. The Company intends to pay for the costs of new
store openings from net cash provided by operating activities.
New stores and newly remodeled stores will use The Avenue(R)
trade name.
In Fiscal 1995, the Company completed an experiment with certain
new stores and remodeled stores that sell both large size
merchandise and smaller "missy" sizes in separate departments.
The Company will discontinue "missy" assortments in those stores
and will sell large sizes there exclusively. The first of these
experimental tandem stores opened in Fiscal 1993. At February 3,
1996, 58 tandem stores were open. During Fiscal 1995 sales of
merchandise of all sizes in tandem stores totaled $41.4 million,
or 11% of the Company's net sales. The average merchandise
margin rate in the tandem stores during Fiscal 1995 was below
the Company's average.
SEASONALITY
The Company's business is seasonal, with the first half of each
fiscal year usually providing a greater portion of the Company's
annual net sales and operating income.
INFLATION AND CHANGING PRICES
Inflation has not had a significant effect on the Company's
operations.
FISCAL CALENDAR
Fiscal 1995 included 53 weeks instead of the 52 weeks in Fiscal
1996, Fiscal 1994 and Fiscal 1993.
Dated: April 8, 1996
12
<PAGE> 8
UNITED RETAIL GROUP, INC. AND SUBSIDIARIES
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF UNITED RETAIL GROUP, INC.:
We have audited the accompanying consolidated balance sheets of
United Retail Group, Inc. and Subsidiaries (the "Company") as of
February 3, 1996 and January 28, 1995 and the related
consolidated statements of income, cash flows and stockholders'
equity for each of the three fiscal years ended February 3,
1996. 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 in accordance with generally accepted
auditing standards. 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 consolidated financial statements referred
to above present fairly, in all material respects, the
consolidated financial position of United Retail Group, Inc. and
Subsidiaries as of February 3, 1996 and January 28, 1995 and the
consolidated results of their operations and their cash flows
for each of the three fiscal years ended February 3, 1996 in
conformity with generally accepted accounting principles.
Coopers & Lybrand, L.L.P.
New York, New York
February 16, 1996, except for Note 15,
as to which the date is March 5, 1996.
13
<PAGE> 9
UNITED RETAIL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
Jan. 28, 1995 Feb. 3, 1996
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 18,506 $ 16,811
Income taxes receivable -- 2,719
Accounts receivable 3,231 1,999
Inventory 37,518 40,401
Prepaid rents 4,025 4,473
Other prepaid expenses 2,380 2,936
Deferred income taxes 848 --
- ----------------------------------------------------------------------------------------------
Total current assets 66,508 69,339
Property and equipment, net 60,743 60,737
Deferred charges and other intangible assets, net of
accumulated amortization of $1,364 and $1,265 7,071 6,846
Deferred income taxes 3,608 811
Other assets 504 1,300
- ----------------------------------------------------------------------------------------------
TOTAL ASSETS $ 138,434 $ 139,033
- ----------------------------------------------------------------------========================
- ----------------------------------------------------------------------------------------------
LIABILITIES
Current liabilities:
Current portion of distribution center financing $ 833 $ 901
Accounts payable, trade 13,915 15,210
Accrued expenses 12,519 14,834
Income taxes payable 1,627 --
- ----------------------------------------------------------------------------------------------
Total current liabilities 28,894 30,945
Distribution center financing 13,233 12,333
Other long-term liabilities 5,635 9,472
- ----------------------------------------------------------------------------------------------
Total liabilities 47,762 52,750
- ----------------------------------------------------------------------------------------------
Commitments and contingencies
- ----------------------------------------------------------------------------------------------
STOCKHOLDER'S EQUITY
Preferred stock, $.001 par value; authorized 1,000,000; none issued
Common stock, $.001 par value; authorized 30,000,000; 13 13
issued 12,679,375 and 12,680,375 outstanding
12,189,375 and 12,190,375
Additional paid-in capital 77,932 78,182
Retained earnings 13,309 8,670
Treasury stock (490,000 shares) at cost (582) (582)
- ----------------------------------------------------------------------------------------------
Total stockholders' equity 90,672 86,283
- ----------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 138,434 $ 139,033
- ----------------------------------------------------------------------========================
</TABLE>
The accompanying notes are an integral part of the Consolidated Financial
Statements.
14
<PAGE> 10
UNITED RETAIL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
52 Weeks 52 Weeks 53 Weeks
Fiscal Year Ended Jan. 29, 1994 Jan. 28, 1995 Feb. 3, 1996
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $ 344,090 $ 357,684 $ 369,173
Cost of goods sold, including
buying and occupancy costs 261,920 276,038 292,790
- ---------------------------------------------------------------------------------------
Gross profit 82,170 81,646 76,383
General, administrative and
store operating expenses 75,744 74,986 80,170
- ---------------------------------------------------------------------------------------
Operating income (loss) 6,426 6,660 (3,787)
Interest (income) expense, net (143) 491 (119)
- ---------------------------------------------------------------------------------------
Income (loss) before income taxes 6,569 6,169 (3,668)
Provision (benefit) for income taxes 2,522 2,276 (957)
Provision for writedown of the
compensation related deferred tax asset 2,479 917 1,928
- ---------------------------------------------------------------------------------------
Net income (loss) $ 1,568 $ 2,976 ($ 4,639)
- ---------------------------------------------------------------------------------------
Net income (loss) per common share $ 0.12 $ 0.22 ($ 0.38)
- ---------------------------------------------------------------------------------------
Weighted average number of common and
common equivalent shares outstanding 13,527,628 13,313,085 12,190,294
</TABLE>
The accompanying notes are an integral part of the Consolidated Financial
Statements.
15
<PAGE> 11
UNITED RETAIL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
<TABLE>
<CAPTION>
Fiscal Year Ended Jan. 29, 1994 Jan. 28, 1995 Feb. 3, 1996
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income (loss) $ 1,568 $ 2,976 ($ 4,639)
Adjustments to reconcile net income (loss) to
net cash provided from operating activities:
Depreciation and amortization
of property and equipment 11,253 10,768 10,101
Amortization of deferred charges, other intangible
assets and original issue discount 343 350 224
Loss on disposal of assets 128 164 379
Compensation expense 347 120 246
Provision for deferred income taxes 2,883 1,653 3,645
Deferred lease assumption revenue amortization -- -- (455)
Lease assumption proceeds -- -- 3,523
Changes in operating assets and liabilities:
Accounts receivable (1,664) (403) 1,232
Income taxes receivable -- -- (2,719)
Inventory (6,038) 383 (2,883)
Accounts payable and accrued expenses 5,414 (8,797) 2,194
Prepaid expenses (220) (512) (1,004)
Income taxes payable (2,102) 14 (1,627)
Other assets and liabilities 505 12 505
- -------------------------------------------------------------------------------------------------
Net Cash Provided from Operating Activities 12,417 6,728 8,722
- -------------------------------------------------------------------------------------------------
Investing Activities:
Capital expenditures (27,720) (10,294) (10,523)
Deferred payment for property and equipment 5,330 (5,330) 934
- -------------------------------------------------------------------------------------------------
Net Cash Used for Investing Activities (22,390) (15,624) (9,589)
- -------------------------------------------------------------------------------------------------
Financing Activities:
Proceeds from issuance of distribution
center financing 6,955 8,000 --
Net proceeds from issuance of common stock 573 256 4
Repayments of long-term debt (160) (729) (832)
- -------------------------------------------------------------------------------------------------
Net Cash Provided from (Used In) Financing Activities 7,368 7,527 (828)
- -------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (2,605) (1,369) (1,695)
Cash and cash equivalents, beginning of period 22,480 19,875 18,506
- -------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 19,875 $ 18,506 $ 16,811
- -----------------------------------------------------------======================================
</TABLE>
The accompanying notes are an integral part of the Consolidated Financial
Statements.
16
<PAGE> 12
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
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 30, 1993 12,075 $ 13 $76,636 $8,765 ($582) $84,832
Exercise of stock options 82 573 573
Compensation expense 347 347
Net income 1,568 1,568
- ---------------------------------------------------------------------------------------------------------
Balance, January 29, 1994 12,157 13 77,556 10,333 (582) 87,320
- ---------------------------------------------------------------------------------------------------------
Exercise of stock options 32 256 256
Compensation expense 120 120
Net income 2,976 2,976
- ---------------------------------------------------------------------------------------------------------
Balance, January 28, 1995 12,189 13 77,932 13,309 (582) 90,672
- ---------------------------------------------------------------------------------------------------------
Exercise of stock options 1 4 4
Compensation expense 246 246
Net loss (4,639) (4,639)
- ---------------------------------------------------------------------------------------------------------
Balance, February 3, 1996 12,190 $13 $78,182 $8,670 ($582) $86,283
- ---------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the Consolidated Financial
Statements.
17
<PAGE> 13
UNITED RETAIL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
On July 17, 1989, Sizes Unlimited Acquisition Corporation
("SUAC") was merged with and into Lernmark, Inc. ("Lernmark"), a
wholly-owned subsidiary of The Limited, Inc. ("The Limited"),
with Lernmark being the surviving corporation. Lernmark was the
holding company for Lerner Woman/Sizes Unlimited, a division of
The Limited. Lernmark subsequently changed its name to United
Retail Group, Inc. ("United Retail"). The Limited, through an
affiliate, initially retained a one-third interest in United
Retail through its acquisition of 2.5 million shares of United
Retail's Common Stock. For financial reporting purposes, the
acquisition was accounted for using the purchase method and,
accordingly, the results of operations have been included in the
financial statements from April 30, 1989, which is considered to
be the effective date. The total cost of the acquisition, which
includes costs directly related to the acquisition, was
allocated among the net assets acquired on the basis of the
respective fair values of such net assets adjusted for the
one-third interest initially retained by The Limited.
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 fiscal 1995 presentation.
The Company as of February 3, 1996 operated 576 women's apparel
stores throughout the United States.
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 year 1995 consisted of 53 weeks and ended
February 3, 1996. Fiscal years 1994 and 1993 each consisted of
52 weeks and ended on January 28,1995 and January 29, 1994,
respectively.
NET RETAIL SALES AND REVENUES
Sales are net of returns and exclude sales tax. Revenues include
sales from all stores operating during that period.
MARKETING COSTS
Marketing costs are charged to operations as incurred.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include amounts on deposit with
financial institutions with maturities of less than 90 days.
INVENTORY
Inventory is stated at the lower of cost or market, on a
first-in, first-out basis, utilizing the retail method.
18
<PAGE> 14
PROPERTY AND DEPRECIATION
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 life of the lease for leaseholds,
improvements, 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 depreciation or
amortization are removed from the accounts with any resulting
gain or loss included in results of operations. Maintenance,
repairs and minor renewals are charged to expense as incurred.
Renewals and betterments which extend service lives are
capitalized.
Inasmuch as the fair values of furniture and fixtures and
leasehold improvements, in management's opinion, approximated
the net book value at April 29, 1989, no adjustment was required
to record these assets at their fair value as of the acquisition
date. Leasehold interests were ascribed an additional $7.5
million as of April 30, 1989, which represents two-thirds of the
fair value of leaseholds in excess of their historical carrying
value at the acquisition date. The fair values ascribed to the
leasehold interests were determined based on current market
rental rates for comparable store locations.
In the third quarter of fiscal 1994 the Company changed the
estimated useful lives of furniture and fixtures at new store
locations opened after 1991 from 7 years to the life of the
lease. This change in estimate resulted in a reduction of
depreciation expense of approximately $700,000 in fiscal 1994.
ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS
The Company believes that SFAS #21, Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be
Disposed of, will not have a material impact on the Company.
COMPUTATION OF INCOME (LOSS) PER COMMON SHARE
Net income (loss) per common share is computed using the
weighted average number of common and common equivalent shares
(stock options) outstanding during the period. Shares issuable
upon the exercise of stock options have not been included in the
primary earnings per share computation for fiscal 1995 because
the effect of such would be anti-dilutive.
For fiscal 1993, 1994 and 1995, the net income (loss) per share
would have been $.30, $.29 and ($.22) per share, respectively,
if the provision for the write-down of the compensation related
deferred tax asset of $2.5 million, $0.9 million and $1.9
million, respectively, was excluded (see Note 8).
DEFERRED CHARGES AND OTHER INTANGIBLE ASSETS
Certain loan facility fees and other costs of obtaining
financing are being amortized on a straight-line basis over the
term of the related loan.
Goodwill, as of February 3, 1996, of $6,846,000 represents the
excess cost over the fair market value of the net assets of the
businesses acquired. Goodwill is being amortized over a 40-year
period using the straight-line method.
19
<PAGE> 15
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.
OTHER MATTERS
The amount of "Accrued Expenses" at February 3, 1996 takes into
account, among other things, The Limited's indemnification of
the Company, under the terms of the acquisition agreement, for
certain tax and ERISA liabilities relating to periods prior to
April 29, 1989.
During 1992, the Company entered into a three-year agreement
with Citibank (South Dakota) N.A. to manage the Company's
proprietary credit card sales program. In 1993, the Company
exercised an option to extend the agreement for another three
years through January 30, 1999.
All costs associated with the opening of new stores are being
expenses as incurred.
3. PROPERTY AND EQUIPMENT
Property and equipment, at cost, consists of (dollars in
thousands):
<TABLE>
<CAPTION>
January 28, February 3,
1995 1996
- ------------------------------------------------------------------------------------
<S> <C> <C>
Land $2,176 $2,176
Buildings 10,980 10,574
Furniture, fixtures and equipment 53,032 59,766
Leasehold improvements 29,744 31,232
Beneficial leaseholds 11,893 11,397
Construction in progress 241 611
------- -------
108,066 115,756
Accumulated depreciation and amortization,
including beneficial leaseholds of $8,287 and $8,934 (47,323) (55,019)
------- -------
Property and equipment, net $60,743 $60,737
======= =======
</TABLE>
20
<PAGE> 16
4. ACCRUED EXPENSES
Accrued expenses consist of (dollars in thousands):
<TABLE>
<CAPTION>
January 28, February 3,
1995 1996
- --------------------------------------------------
<S> <C> <C>
Fixed asset payable ($ 80) $ 934
Occupancy expenses 2,326 2,731
Payroll related expenses 2,764 2,899
Insurance payable 2,465 2,914
Sales taxes payable 1,177 1,346
Other 3,867 4,010
-------- -------
$ 12,519 $14,834
======== =======
</TABLE>
5. LEASED FACILITIES AND COMMITMENTS
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):
<TABLE>
<CAPTION>
Fiscal Fiscal Fiscal
1993 1994 1995
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Store rent
Fixed minimum $32,874 $37,002 $39,300
Percentage 63 (31) 41
------- ------- -------
Total store rent 32,937 36,971 39,341
Equipment and other 424 404 517
------- ------- -------
Total rent expense $33,361 $37,375 $39,858
======= ======= =======
</TABLE>
At February 3, 1996, the Company was committed under store
leases with initial terms ranging from 1 to 20 years and with
varying renewal options. At January 29, 1994, January 28, 1995
and February 3, 1996, accrued rent expense amounted to $5.6
million, $5.5 million and $5.5 million, respectively, of which
$5.1 million, $5.6 million and $5.9 million, respectively, is
included in "Other long-term liabilities".
A summary of approximate rent commitments under noncancelable
leases follows (dollars in thousands) for the fiscal years:
<TABLE>
<S> <C>
1996 $ 40,520
1997 32,513
1998 26,270
1999 22,493
2000 19,661
Thereafter 80,488
--------
Total minimum obligations $221,945
========
</TABLE>
21
<PAGE> 17
In July 1995, the Company agreed to assume the lease obligations
of 21 stores previously operated by another retail chain. In
order to induce the Company to assume the leases, the assignor
of the leases paid the Company approximately $3.5 million. This
payment has been recorded as accrued rent payable and will be
amortized against rent expense over the life of the assumed
leases.
6. LONG-TERM DEBT (SEE ALSO NOTES 7 AND 15)
Long-term debt consists of (dollars in thousands):
<TABLE>
<CAPTION>
January 28, February 3,
1995 1996
- ----------------------------------------------------------------------------
<S> <C> <C>
Distribution center financing:
Current portion $833 $901
Long-term portion 13,233 12,333
------- -------
Total distribution center financing $14,066 $13,234
======= =======
</TABLE>
In 1994, the Company executed a fifteen-year $8.0 million loan
bearing interest at 8.64%. Interest and principal are payable in
equal monthly installments beginning May 1, 1994. The loan is
collateralized by a mortgage on the national distribution center
owned by the Company in Troy, Ohio.
In 1993, the Company executed a ten-year $7.0 million note
bearing interest at 7.3%. Interest and principal are payable in
equal monthly installments beginning November 1993. The note is
collateralized by the material handling equipment in the
distribution center.
In fiscal 1993, the Company extended to January 1997 the term of
both its Credit Agreement and its Letter of Credit Agreement
with The Chase Manhattan Bank (National Association) ("Chase").
Additionally, the revolving credit facility under the Credit
Agreement and the facility for trade letters of credit under the
Letter of Credit Agreement each have limits of $25 million. As
of February 3, 1996, the Company had not drawn upon its
revolving credit facility except to issue standby letters of
credit totaling $4.5 million as collateral for obligations under
casualty insurance policies. The Company had $13.9 million of
outstanding trade letter of credit commitments. Loans under the
revolving credit facility will bear interest, at the option of
the Company, at either (i) the higher of the Federal Funds Rate
plus .5% or the prime commercial lending rate of Chase, or (ii)
the London Interbank Offered Rate plus 1.25%. The fees for
letters of credit under the revolving credit facility will be a
maximum of 1.50% per annum plus a maximum of $5,000 per annum in
origination charges. In addition, the Company must pay a
commitment fee equal to a maximum of 3/8 of 1% of the unused
portion of the commitment, per annum, for each of the
aforementioned facilities.
The Company is obligated to maintain several financial
covenants, including a current ratio and a fixed charges ratio,
and has restrictions on paying dividends, as well as a
limitation on aggregate capital expenditures.
The Company has pledged to Chase as collateral the shares of
common and preferred stock of its subsidiaries.
22
<PAGE> 18
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following represents the fair value of the Company's
Financial Instruments as of February 3, 1996.
<TABLE>
<CAPTION>
Carrying Fair
Amount Value
- ---------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and cash equivalents $18,506 $18,506
Liabilities
Long term debt including current portion 13,234 13,415
</TABLE>
The carrying amounts of cash and cash equivalents approximates
fair value because of the short-term maturity of these
instruments. The fair value of long-term debt including current
portion is estimated based on the current rates quoted to the
Company for debt of the same or similar issues.
8. INCOME TAXES
Effective February 2, 1992, the Company had prospectively
adopted 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 represents the change
in the deferred tax asset/liability balance.
The provision (benefit) for income taxes consists of (dollars in
thousands):
<TABLE>
<CAPTION>
Fiscal Fiscal Fiscal
1993 1994 1995
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Currently payable:
Federal $1,828 $1,455 ($2,523)
State 290 85 (151)
------ ------ -------
2,118 1,540 (2,674)
Deferred:
Federal 2,361 1,353 2,850
State 522 300 795
------ ------ -------
2,883 1,653 3,645
------ ------ -------
$5,001 $3,193 $971
====== ====== =======
</TABLE>
23
<PAGE> 19
Reconciliation of the provision for income taxes from the U.S.
Federal statutory rate to the Company's effective rate is as
follows:
<TABLE>
<CAPTION>
Fiscal Fiscal Fiscal
1993 1994 1995
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory Federal income tax rate 34.0% 34.0% (34.0%)
State income taxes, net of Federal benefit 3.7 2.2 5.3
Goodwill amortization 1.1 1.1 1.9
Other (.4) (.4) .7
---- ---- ----
Sub-total 38.4 36.9 (26.1)
Write-down of the compensation related deferred tax asset 37.7 14.9 52.6
---- ---- ----
76.1% 51.8% 26.5%
==== ==== ====
</TABLE>
The deferred tax asset reflects the tax impact of temporary
differences. The components of the net deferred tax asset as of
February 3, 1996 are as follows:
<TABLE>
<S> <C>
Assets:
Inventory $281
Accruals and reserves 255
Compensation 1,995
-----
2,531
-----
Liabilities:
Depreciation 1,720
-----
Net deferred tax asset $811
=====
</TABLE>
Future realization of the tax benefits attributable to these
existing deductible temporary differences ultimately depends on
the existence of sufficient taxable income within the carryback
and/or carryforward period available under the tax law at the
time of the tax deduction. Based on management's assessment, it
is more likely than not that the net deferred tax asset will be
realized through future taxable earnings. Included in the fiscal
1993, fiscal 1994 and fiscal 1995 income tax expense is a $2.5
million, $0.9 million and $1.9 million write-down of the
compensation related deferred tax asset, respectively, which had
been recorded in fiscal 1992 based upon the initial public
offering price of $15 per share. As of February 3, 1996, the
remaining compensation related deferred tax asset will be fully
realizable upon the exercise of all of the outstanding options
only if (i) the market price of the stock equals or exceeds
$3.875 per share upon exercise and (ii) the compensation expense
deduction is not limited by future enacted tax laws. The
underlying options of the compensation related deferred tax
asset are exercisable through December 31, 1999.
At January 28, 1995 and February 3, 1996, the Company has
pre-acquisition net operating loss carryforwards aggregating
approximately $0.9 million and $0.6 million, respectively,
available to reduce future taxable income in certain states,
expiring through 2004.
24
<PAGE> 20
9. RELATED PARTY TRANSACTIONS
The Company shared certain store locations with subsidiaries of
The Limited and obtained from subsidiaries of The Limited
certain services with respect to merchandise distribution and
the purchase of supplies. As of June 1993, none of these
services are provided by subsidiaries of The Limited. The
Company continues to share certain store locations. During
fiscal 1993, fiscal 1994, and fiscal 1995, the Company was
charged $4.8 million, $0.8 million and $1.2 million
respectively, by The Limited for the aforementioned services and
occupancy costs. The impact on the statements of income was as
follows (dollars in thousands):
<TABLE>
<CAPTION>
Fiscal Fiscal Fiscal
1993 1994 1995
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cost of goods sold, including
buying and occupancy costs $2,589 $815 $1,176
General, administrative and store operating costs $2,180 $0 $0
</TABLE>
An affiliate of the Chairman of the Board of the Company (in
which he holds an 80% interest) provides management and
administrative services to the aforementioned subsidiary of The
Limited 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 1993, fiscal 1994, and fiscal
1995, the aforementioned affiliate was paid $161,000, $110,000
and $114,000, respectively, by that subsidiary of The Limited.
During fiscal 1993, fiscal 1994, and fiscal 1995, the Company
incurred expenses to a subsidiary of The Limited and to the
affiliate of the Chairman of the Board of the Company referred
to above in the combined amounts of $295,000, $179,000, and
$639,000, respectively, under certain Sublicensing Agreements
with respect to trademarks.
During January 1995, the Company made investments in a vendor
from which the Company purchased apparel. Purchases during the
1995 fiscal year totaled $1.8 million. The investments made
(which are all the investments in the vendor made by the
Company) were $6,000 for 10% of the outstanding common stock of
the vendor and an unsecured loan facility in the amount of
$400,000 under which $300,000 has been borrowed and is payable
on January 31, 1997 with interest at 2 percentage points over
the prime rate payable quarterly. The Company also holds a
warrant to purchase shares equivalent to an additional 10% of
the outstanding common stock of the vendor. Purchases from the
vendor are on terms comparable to terms negotiated with other
vendors.
During fiscal 1995, the Company made an investment in one of the
purchasing agents that acted on the Company's behalf in
contracting for apparel with foreign vendors. The investment
made during fiscal 1995 (which is the only investment made in
the purchasing agent by the Company) was $474,000 for 25% of the
outstanding common stock of the purchasing agent. Fees paid to
the purchasing agent during fiscal 1995 totaled $844,000,
principally as percentage commissions on apparel purchases.
Commissions were paid on terms comparable to terms negotiated
with other purchasing agents. In fiscal 1995, the Company
extended to the purchasing agent a loan of $125,000 payable on
May 1, 1996 with interest thereafter at 2 percentage points
over the prime rate.
25
<PAGE> 21
10. RETIREMENT PLAN
The Company maintains a 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.
Pension costs for all benefits charged to income during fiscal
1993, fiscal 1994 and fiscal 1995 approximated $404,000, $92,000
and $248,000 respectively.
11. 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 1,000,000 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 issue of such class or series of Preferred Stock. The
Company has paid no cash dividends and expects to retain any
future earnings for expansion of its business rather than to pay
cash dividends in the foreseeable future. Additionally, certain
loan agreements, to which the Company is a party, impose
restrictions on the payments of dividends.
12. STOCK OPTIONS
Under the 1989 Management Stock Option Plan (the "1989 Plan")
established on July 17, 1989, options to purchase 1,078,125
shares and 50,000 shares at exercise prices of $1.00 and $5.00
per share, respectively, have been granted and are outstanding
as of February 3, 1996. All options granted under the 1989 Plan
became vested and exercisable upon completion of the IPO and the
payment of certain obligations to The Limited Inc. and expire on
December 31, 1999.
Under 1991 Stock Option Agreements between the Company and
certain executive officers (the "1991 Options"), the Board of
Directors approved and granted, on July 24, 1991, options to
purchase 300,000 shares at an exercise price of $5.00 per share
which are outstanding as of February 3, 1996. These options
became vested and exercisable upon completion of the IPO and the
payment of certain obligations to The Limited Inc. and expire on
December 31, 1999.
The voluntary resignation of an optionee does not limit the
above options' expiration date or otherwise affect the
exercisability of these options in any way.
26
<PAGE> 22
The Restated 1990 Stock Option Plan (as amended, the "1990
Plan") was established in June 1990 and amended in November
1991, December 1992 and May 1993. Exercise prices are required
by the 1990 Plan to be not less than fair market value of the
Company's stock on the date of grant. The total number of shares
that may be optioned under the 1990 Plan, including past grants,
is 880,000 shares. The options granted under the 1990 Plan
expire between seven and ten years after the date of grant. As
of January 28, 1995 and February 3, 1996, outstanding options to
purchase 636,750 and 665,000 shares, respectively, have been
granted under the Plan at average exercise prices of $11.09 and
$8.80 per share, respectively. The options granted vest
beginning one year from the date of grant, and vest fully after
four or five years, subject to acceleration under certain
circumstances. 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. Public Directors (as defined in the Restated
Stockholders' Agreement) receive annual grants of options under
the 1990 Plan. Options are granted, and the 1990 Plan is
administered, by the Compensation Committee of the Board of
Directors composed of non-employees of the Company. The Company
recorded compensation expense pursuant to the 1990 Plan in
fiscal 1994 and in fiscal 1995 of $120,000 and $246,000,
respectively.
A summary of stock option transactions under the 1990 Plan
follows:
<TABLE>
<CAPTION>
Fiscal Fiscal Fiscal
1993 1994 1995
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Options outstanding at beginning of period 395,500 586,250 636,750
Options granted (a) 344,500 169,500 111,500
Options exercised 81,750 32,625 1,000
Options canceled (a) 72,000 86,375 82,250
Options outstanding at end of period 586,250 636,750 665,000
Options available for grant at end of period 207,000 123,875 94,625
Options vested and outstanding at end of period 67,100 109,900 141,900
Options exercisable at end of period and having
an exercise price that is less than the respective
year end common stock closing price 43,375 54,100 0
Range of option prices per share for
outstanding options $4.07-$26.75 $4.50-$26.75 $4.50-$26.75
</TABLE>
(a) Options granted and options canceled do not include the
reissuance in fiscal 1994 and fiscal 1995 of 160,000 and
210,000 options at exercise prices of $10.00 and $8.50 per
share, respectively.
The Company anticipates adopting SFAS No. 123, Accounting for
Stock Based Compensation for disclosure purposes only, and will
continue to account for stock based compensation under APB No.
25.
27
<PAGE> 23
13. SUPPLEMENTAL CASH FLOW INFORMATION
Net cash flow from operating activities reflects cash payments
for interest and income taxes as follows (dollars in thousands):
<TABLE>
<CAPTION>
Fiscal Fiscal Fiscal
1993 1994 1995
----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest expense (income), net
per statements of income ($143) $491 ($119)
Less: Non-cash interest expense (106) (101) (41)
------ ------ -----
Net cash interest, including interest income
of $678, $1,170 and $1,425 ($249) $390 ($160)
====== ====== =====
Income taxes $4,087 $1,605 $474
====== ====== =====
</TABLE>
14. STOCK OFFERING AND NON-RECURRING CHARGES
During the first quarter of fiscal 1993, a secondary offering
was completed in which 1,729,355 shares of Common Stock were
sold by certain stockholders at a price of $25.50. The Company
did not receive any of the proceeds from the shares sold by the
selling stockholders.
15. SUBSEQUENT EVENT
On March 5, 1996, the Company and the Chase Manhattan Bank
(N.A.) ("Chase") amended agreements providing two credit
facilities and extended the term of each to February 1999. The
first facility now provides for the issuance by Chase of trade
letters of credit for the account of the Company in an aggregate
amount at any time of up to $25.0 million, of which $13.9
million was utilized at February 3, 1996. The second facility
now provides for revolving credit loans totaling a maximum of
$15.0 million, of which up to $10.0 million would be available
for standby letters of credit for general corporate purposes.
The commitment fee for the revolving credit facility is a
maximum of 1/2 of 1%. The credit facilities continue to be
secured by a pledge of the stock of the Company's subsidiaries.
Merchandise being purchased under outstanding trade letters of
credit is subject to a security interest pursuant to the
Letter of Credit agreement. Loans under the revolving credit
facility will bear interest, at the option of the Company, at
either (i) the higher of the Federal Funds Rate plus 0.5% or
the prime commercial lending rate of Chase, or (ii) the London
Interbank Offered Rate plus 1.5%. The Company has not drawn
upon its revolving credit facility except to issue standby
letters of credit totaling $4.5 million at February 3, 1996 as
collateral for obligations in the ordinary course of business
under casualty insurance policies.
28
<PAGE> 24
UNITED RETAIL GROUP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(shares and dollars in thousands)
<TABLE>
<CAPTION>
Feb. 1, Jan. 30, Jan. 29, Jan. 28, Feb. 3,
Fiscal Year Ended 1992 1993 1994 1995 1996
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales $264,071 $330,083 $344,090 $357,684 $369,173
Cost of goods sold, including
buying and occupying costs 190,141 236,827 261,920 276,038 292,790
Gross profit 73,930 93,256 82,170 81,646 76,383
General, administrative and
store operating expenses 60,022 73,192 75,744 74,986 80,170
Non-recurring general expenses 16,330
Operating income 13,908 3,734 6,426 6,660 (3,787)
Interest expense (income), net 3,869 (281) (143) 491 (119)
Non-recurring interest expense 6,083
Income (loss) before taxes 10,039 (2,068) 6,569 6,169 (3,668)
Provision (benefit) for
income taxes 3,968 (748) 2,522 2,276 (957)
Provision for writedown of the
compensation related
deferred tax asset 2,479 917 1,928
Net income (loss) 6,071 (1,320) 1,568 2,976 (4,639)
Net income (loss)
per common share(1) $.76 $(.04) $.12 $.22 $(.38)
Weighted average number of
common shares outstanding(1) 8,466 12,974 13,528 13,313 12,190
BALANCE SHEET DATA
(AT PERIOD END):
Working capital $12,432 $28,981 $24,533 $37,614 $38,394
Total assets 74,648 123,807 141,607 138,434 139,033
Long-term debt 20,214 0 0 0 0
Distribution center financing 0 0 6,293 13,233 12,333
Total stockholders' equity 19,284 84,832 87,320 90,672 86,283
</TABLE>
(1) Prior to the completion of the initial public offering in Fiscal 1992, the
weighted average common shares outstanding included outstanding warrants,
certain stock options issued within one year of the offering and the outstanding
options granted under the 1990 Stock Option Plan. Thereafter, all of the
outstanding stock options are included. See also note 2 of Notes to the
Company's Consolidated Financial Statements.
The selected financial data should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
with the Company's Consolidated Financial Statements, including the notes
thereto. The data for the periods indicated has been derived from the
consolidated financial statements of the Company, which have been audited by
Coopers & Lybrand, L.L.P., independent accountants, whose report for the three
fiscal years ended February 3, 1996 appears elsewhere in this annual report.
29
<PAGE> 25
UNITED RETAIL GROUP, INC.
EXECUTIVE OFFICERS AND DIRECTORS
RAPHAEL BENAROYA
Chairman of the Board, President
and Chief Executive Officer*
GEORGE R. REMETA
Vice Chairman -- Chief Financial Officer,
Secretary and Director*
CHARLES R. WILKINSON
Executive Vice President -- Organizational Development
KENNETH P. CARROLL
Senior Vice President -- General Counsel*
ELLEN DEMAIO
Senior Vice President -- Merchandise
JULIE L. DALY
Vice President -- Planning and Distribution
KENT FRAUENBERGER
Vice President -- Logistics
JON GROSSMAN
Vice President -- Finance*
ALAN R. JONES
Vice President -- Real Estate
BRADLEY ORLOFF
Vice President -- Marketing
ROBERT PORTANTE
Vice President -- MIS
FREDRIC E. STERN
Vice President -- Controller
JOHN I. TROMBLEY
Vice President -- Store Design and Construction
JOSEPH A. ALUTTO
A Director of the Company, is the Dean of the Max M. Fisher School of Business
at Ohio State University
RUSSELL BERRIE
A Director of the Company, is the Chairman of the Board and Chief Executive
Officer of Russ Berrie and Company, Inc., an international toy manufacturer
JOSEPH CIECHANOVER
A Director of the Company, is the Chairman of the Board of El Al Israel Airlines
Ltd.
ILAN KAUFTHAL
A Director of the Company, is a Managing Director of Schroder Wertheim & Co.,
Inc., an investment banking firm
VINCENT P. LANGONE
A Director of the Company, is Chairman of the Board of L & S Associates, Inc., a
management consulting firm
CHRISTINA A. MOHR
A Director of the Company, is a Managing Director of Lazard Freres & Co. LLC,
an investment banking firm
RICHARD W. RUBENSTEIN
A Director of the Company, is a Partner of Squire, Sanders &
Dempsey, a law firm
*An officer of the parent holding company rather than the operating subsidiary,
United Retail Incorporated or United Retail Logistics Operations Incorporated.
SHAREHOLDER INFORMATION
The Company's Annual Report on Form 10-K, including financial statement
schedules, filed with the Securities and Exchange Commission ("SEC"), is
available without charge upon written request to Kenneth P. Carroll, Esq.,
Senior Vice President - General Counsel, at the Company's headquarters. Mail
should be addressed to 365 West Passaic Street, Rochelle Park, New Jersey,
07662; E-mail should be addressed to [email protected]. The Annual Report on Form
10-K is also available through the SEC at http://www.sec.gov.
The Common Stock is quoted on the NASDAQ National Market under the symbol
"URGI." The last reported sale price of the Common Stock on the NASDAQ National
Market on April 8, 1996 was 5 1/4. The following table sets forth the reported
high and low sale prices of the Common Stock as reported by NASDAQ for each
calendar quarter indicated.
<TABLE>
<CAPTION>
High Low
- -----------------------------------------------
<S> <C> <C>
1994
First Quarter $ 12 1/2 $ 8
Second Quarter $ 9 1/2 $ 7
Third Quarter $ 9 $ 6 1/2
Fourth Quarter $ 8 3/8 $ 6 1/2
1995
First Quarter $ 11 1/8 $ 7 5/8
Second Quarter $ 8 5/8 $ 5 3/8
Third Quarter $ 7 7/8 $ 4 1/8
Fourth Quarter $ 5 7/8 $ 3 7/8
1996
First Quarter $ 5 1/2 $ 3 7/8
</TABLE>
The Company's transfer agent and registrar is Continental Stock Transfer and
Trust Co., 2 Broadway, New York, New York 10004.
At March 31, 1996, there were approximately 1,700 beneficial owners of Common
Stock.
<PAGE> 1
EXHIBIT 23.1
[COOPERS & LYBRAND LETTERHEAD]
Consent of Independent Accountants
We consent to the incorporation by reference in the registration statements of
United Retail Group, Inc. and Subsidiaries (the "Company") on Forms S-8 (File
No. 33-48500, No. 33-48501 and No. 33-67288) of our report dated February 16,
1996 except for Note 15, as to which the date is March 5, 1996, on our audits of
the consolidated financial statements and financial statement schedule of the
Company as of February 3, 1996 and January 28, 1995 and for each of the three
fiscal years ended February 3, 1996, which report is incorporated by reference
in this Annual Report on Form 10-K.
/s/ COOPERS & LYBRAND L.L.P.
-----------------------------
COOPERS & LYBRAND L.L.P.
New York, New York
April 12, 1996
<PAGE> 1
EXHIBIT 23.2
[COOPERS & LYBRAND LETTERHEAD]
Report of Independent Accountants
Our report on the consolidated financial statements of United Retail Group,
Inc. and subsidiaries (the "Company") has been incorporated by reference in
this Form 10K from Page 13 of the 1995 Annual Report to Shareholders of the
Company. In connection with our audits of such financial statements, we have
also audited the related financial statement schedule listed in the index on
page 16 of this Annual Report on Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
/s/ COOPERS & LYBRAND L.L.P.
-----------------------------
COOPERS & LYBRAND L.L.P.
New York, New York
February 16, 1996
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-03-1996
<PERIOD-START> JAN-29-1995
<PERIOD-END> FEB-03-1996
<CASH> 16,811
<SECURITIES> [BLANK]
<RECEIVABLES> 4,718
<ALLOWANCES> [BLANK]
<INVENTORY> 40,401
<CURRENT-ASSETS> 69,339
<PP&E> 115,756
<DEPRECIATION> 55,019
<TOTAL-ASSETS> 139,033
<CURRENT-LIABILITIES> 30,945
<BONDS> [BLANK]
[BLANK]
[BLANK]
<COMMON> 13
<OTHER-SE> 86,270
<TOTAL-LIABILITY-AND-EQUITY> 139,033
<SALES> 369,173
<TOTAL-REVENUES> 369,173
<CGS> 292,790
<TOTAL-COSTS> 292,790
<OTHER-EXPENSES> 80,170
<LOSS-PROVISION> [BLANK]
<INTEREST-EXPENSE> (119)
<INCOME-PRETAX> (3,668)
<INCOME-TAX> 971
<INCOME-CONTINUING> (4,639)
<DISCONTINUED> [BLANK]
<EXTRAORDINARY> [BLANK]
<CHANGES> [BLANK]
<NET-INCOME> (4,639)
<EPS-PRIMARY> (.38)
<EPS-DILUTED> (.38)
</TABLE>
