URGI United Retail Grp. (MM)

United Retail Group, Inc. (NASDAQ-NMS: "URGI") today announced both preliminary and unaudited earnings for the fourth quarter and full year ended January 28, 2006, as well as sales for February 2006. The attached summary financial statements for the fourth quarter and the fiscal year are subject to final adjustment during the course of the audit. Fourth Quarter For the fourth quarter of fiscal 2005, net sales increased 11% to $119.4 million from $107.9 million in the comparable period last year. Comparable store sales increased 12% for the fourth quarter on top of an 8% increase in the prior year period. Comparable store sales data does not include online ("Shop @ Home") sales. Shop @ Home sales increased 137% for the fourth quarter. Net income for the fourth quarter of 2005 was $21.3 million, or $1.54 per diluted share, compared with $0.7 million, or $0.05 per diluted share, in the fourth quarter of 2004. George R. Remeta, Vice Chairman and Chief Administrative Officer, stated: "The net income for the fourth quarter of 2005 includes a benefit from income taxes of $16.9 million compared with $1.8 million in the prior year period, principally as a result of the reversal in the fourth quarter of fiscal 2005 of the valuation allowance related to deferred tax assets, net operating loss carryforwards and other tax attributes. Going forward, the Company is projecting a normal tax rate in the range of 37% to 40% of pretax earnings." Fiscal Year For fiscal 2005, net sales increased 10% to $438.7 million from $399.3 million in the previous year. Comparable store sales increased 12% for the fiscal year on top of a 2% increase in the prior year. Shop @ Home sales increased 120% for the fiscal year. Net income for fiscal 2005 was $28.3 million, or $2.12 per diluted share, versus a net loss of $10.5 million, or $0.82 per share, in the previous year. Net income (loss) includes a benefit from income taxes of $16.8 million for fiscal 2005 and $2.0 million for the previous year. Raphael Benaroya, Chairman, President and Chief Executive Officer, stated: "While I am pleased with the earnings surge this quarter and year, the qualitative aspects of the increase merit as much attention. First, there was a strong increase in customer transactions. Second, sales and margins improved over a broad range of product categories. Third, performance improved all across the country; in response, I believe, to the repositioning of our product assortment." Mr. Benaroya added: "Online sales continued to grow at a fast pace during this quarter and year, principally from a greater number of active customers and a resulting increase in transactions." February 2006 Net sales decreased 2% to $29.3 million for February 2006 from $29.9 million for February 2005. Comparable store sales decreased 1% for the month versus a 13% increase in February 2005. Shop @ Home sales increased 87% for the month. Raphael Benaroya commented: "Excellent sales results in December and January resulted in Fall carryforward apparel inventory being down approximately 20% versus the beginning of February last year. As a result, sales of Fall carryforward merchandise during the month on a per store basis were down approximately 25% versus the prior February, while sales of new Spring merchandise were up about 5%. Also, during the month, sales were much stronger in the warmer weather zones compared with the remainder of the country versus last year. Although it's early, this may be a good leading indicator for the new Spring assortments." Investor Conference Call The Company invites investors to listen to a broadcast of the Company's conference call to discuss fourth quarter results, as well as ongoing corporate developments. The call will be broadcast live at 11:30 a.m. (Eastern Time) today, and can be accessed by logging on to http://www.vcall.com. Raphael Benaroya, Chairman, President and Chief Executive Officer, and George R. Remeta, Vice Chairman and Chief Administrative Officer, will host the call. An online archive of the broadcast will be available within one hour of the completion of the call and will be accessible at http://www.vcall.com until March 16, 2006. Certain financial data disclosed for the first time during the broadcast will be posted on the "Press Releases" page of the financial information section of the Company's website, http://www.unitedretail.com. United Retail Group, Inc. is a specialty retailer of large-size women's fashion apparel, footwear and accessories featuring AVENUE(R) brand merchandise. The Company operates 500 AVENUE(R) stores with 2,194,000 square feet of selling space, as well as the AVENUE.COM(R) website at http://www.avenue.com. The above release contains certain brief forward-looking statements concerning the Company's operations and performance. The Company cautions that any forward-looking statements are summary in nature, involve risks and uncertainties and are subject to change based on various important factors, many of which may be beyond the Company's control. Accordingly, the Company's future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. The following additional factors, among others, could also affect the Company's actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements included in this release or otherwise made by management: threats of terrorism; war risk; shifts in consumer spending patterns, overall economic conditions; the impact of increased competition; variations in weather patterns; uncertainties relating to execution of the Company's product repositioning strategy; store lease expirations; increases in interest rates; the ability to retain, hire and train key personnel; risks associated with the ability of the Company's manufacturers to deliver products in a timely manner; political instability and other risks associated with foreign sources of production and increases in fuel costs. The reports filed by the Company with the Commission contain additional information on these and other factors that could affect the Company's operations and performance. Further, the summary financial data contained in the above release should be viewed as preliminary and subject to final adjustment until the Company files its Annual Report on Form 10-K with the Securities and Exchange Commission. The Company does not intend to update the forward-looking statements contained in the above release, which should not be relied upon as current after today's date. -0- *T UNITED RETAIL GROUP, INC. --------------- 4TH QTR 2005 (000'S) Consolidated Statement Of Operations 13 weeks ended 52 weeks ended --------------------------- ------------------------- (Unaudited) (Unaudited) January January Percent January January Percent 28, 2006 29, 2005 + or - 28, 2006 29, 2005 + or - --------------------------- ------------------------- Net sales $119,444 $107,865 10.7% $438,738 $399,250 9.9% Cost of goods sold, including buying and occupancy costs 89,478 83,279 7.4% 327,312 315,394 3.8% ------------------------------------------------------- Gross profit 29,966 24,586 21.9% 111,426 83,856 32.9% General, administrative and storeoperating expenses 25,492 25,453 0.2% 99,810 96,838 3.1% ------------------------------------------------------- Operating income (loss) 4,474 (867) - 11,616 (12,982) - Interest income (1) 169 6 - 483 1,344 - Interest expense (173) (210) - (652) (870) - ------------------------------------------------------- Income (loss) before income taxes 4,470 (1,071) - 11,447 (12,508) - (Benefit from) provision for income taxes (2)(3) (16,869) (1,768) - (16,804) (2,028) - ------------------------------------------------------- Net income (loss) $21,339 $697 - $28,251 ($10,480) ======================================================= Weighted average shares outstanding: Basic 13,281 12,658 12,958 12,749 Diluted 13,841 12,775 13,328 12,749 Net income (loss) per common share: Basic $1.61 $0.06 $2.18 ($0.82) Diluted $1.54 $0.05 $2.12 ($0.82) (1) Includes for the fifty-two weeks ended January 29, 2005, interest income of $1.285 million related to an Internal Revenue Service settlement. (2) Includes for the fifty-two weeks ended January 29, 2005, federal tax benefit of $0.350 million related to an Internal Revenue Service settlement. (3) Includes the reversal of $22.6 million of the valuation allowance in the fourth quarter of fiscal 2005 related to deferred tax assets, net operating loss carryforwards and other tax attributes. ====================================================================== Consolidated Condensed ------------------------ Balance Sheets ------------------------ (Unaudited) January 28, January 29, 2006 2005 ------------------------------ Assets -------- Cash and cash equivalents $32,268 $12,596 Inventory 50,275 49,503 Current deferred tax assets 9,350 - Other 9,963 8,557 ------------------------------ Total current assets $101,856 $70,656 Property and equipment, net 66,791 79,026 Deferred compensation plan assets 4,086 3,473 Non-current deferred tax assets 9,473 - Other assets 1,927 2,053 ------------------------------ Total assets $184,133 $155,208 ============================== Liabilities and Stockholders' Equity ---------------------------------------- Current liabilities $55,305 $54,320 Long-term distribution center financing 1,877 2,633 Long-term capital leases - 1,735 Long-term debt - - Deferred lease incentives 10,636 12,908 Deferred compensation plan liabilities 4,086 4,853 Other non-current liabilities 9,066 8,710 Stockholders' equity (1) 103,163 70,049 ------------------------------ Total liabilities and stockholders' equity $184,133 $155,208 ============================== (1) In July 2004, paid-in capital increased $1.157 million relating to an Internal Revenue Service settlement. At January 28, 2006, the borrowing capacity of the Company under the Financing Agreement with The CIT Group/Business Credit, Inc. ("CIT") was $8.9 million, trade letters of credit for the account of the Company were outstanding in the amount of $24.5 million, standby letters of credit were outstanding in the amount of $6.1 million and no loan from CIT was outstanding. The Company's balance sheet cash on hand was unrestricted. ====================================================================== Statistics 13 weeks ended 52 weeks ended ------------ ---------------------- -------------------------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) Store Count January 28, January 29, January 28, January 29, ------------ 2006 2005 2006 2005 ---------------------- -------------------------- Beginning of period 507 530 514 535 New 0 0 1 2 Closed (7) (16) (15) (23) End of period 500 514 500 514 Selling Square Footage (000's) ------------------- Beginning of period 2,219 2,309 2,249 2,327 New / Expansion 0 0 4 8 Closed (25) (60) (59) (86) End of period 2,194 2,249 2,194 2,249 Average 2,217 2,301 2,227 2,311 *T