As Wal-Mart's loss-making German operation remains stuck between a rock and a hard place in an increasingly difficult market, analysts have been looking at the options for the troubled division following chief executive Lee Scott's recent admission that the foray into the German market had been a "failure". Unless Wal-Mart pumps even more cash into the unit it is hard to see how it is going to make any progress, said one analyst. "Assuming the market doesn't change, Wal-Mart Germany has got to go double or quits; it's got to grow or get out." But others argued making further purchases would not solve Wal-Mart's problems. "Scott has said publicly that lack of scale is not the issue," said Andrew Fowler at Morgan Stanley Dean Witter. "They've taken on too much, and buying more chains means buying more problems. Wal-Mart is good at growing organically but it doesn't have a great track record with acquisitions and turning round businesses doing badly. It can't really go forward or backwards." Moreover, tiny profit margins leaves no cash for vital reinvestment. However, the decision to bring in the George clothing range and increase the non-food offering is seen as a positive step in the right direction. "They need a whole change of strategy when it comes to merchandising," said Clive Vaughan of Retail Intelligence. "There has to be a broader move towards higher margin non-food and own label lines." Most observers feel that Wal-Mart Germany's plans for 50 new stores, and the refurbishment of existing ones by 2003, are unlikely to go ahead as the remodelling process is at a halt and planning laws hinder new developments. {{NEWS }}