Specialty retailer of plus-size women's fashion apparel and footwear, United Retail Group Inc, made a net loss of $4.6 million in the second quarter as pressure on margins and higher costs took their toll on earnings.

The New Jersey-based operator of 551 Avenue stores said that a six per cent rise in sales to $113.7m was more than offset by pressure on margins due to significant promotional activity and higher than anticipated expenses.

United said same-store sales rose four per cent and that for the first half it suffered a net loss of $1.8m compared to a net profit of $3.3m in the year-ago period. First half sales rose six per cent to $229.2m and same-store sales were up three per cent.

Vice chairman and CAO, George Remeta, stated: "Our posture was very promotional in the second quarter and that put pressure on our merchandise margins. As a result, the second quarter gross profit rate declined significantly. Our inventory at the end of the season was appropriately valued."

He added: "Net results were also impacted by higher general, administrative and store operating expenses, including benefits and insurance. In contrast, the Shop@Home business did better than expected.

"In addition, during the quarter we brought the call centre and Shop@Home distribution facility in-house on schedule and below budget; this is expected to reduce operating costs substantially in fiscal 2003."