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Bob Nardelli is a watched man. As a former top-level executive of General Electric with no retail experience, many are waiting with great anticipation to see how he fits in with The Home Depot culture and how he adapts to running the world's largest home improvement chain.

This sense of constant surveillance is especially intense because Nardelli has a tough act to follow. He knew there would be comparisons to Arthur Blank, the charismatic co-founder who cast a long shadow during his tenure as ceo. But after nearly six months on the job, Nardelli not only has managed to charm associates in the field but has embarked on a series of smart, calculated moves--not least of which is its recent expansion into Mexico--to drive growth and profitability.

"Every business has passion--GE had tremendous passion--but at The Home Depot it's acceptable to display emotion, whether you're hugging each other or up on a chair giving a cheer," he recently told The Atlanta Journal and Constitution, the local newspaper near the company's Atlanta headquarters.

The pride Nardelli displays, and the fact he has kept the ship on course, is welcome news at this crucial time in The Home Depot's history, when a softening economy, increased competition and deflated lumber and building material prices are challenging it to find new ways of sustaining profits. But Nardelli's background has prepared him well for pressure situations. Along with his keen understanding of corporate America, he learned a lot about the team experience as a star on the gridiron during his college days.

"Great athletes don't take many days off. ... That's my style. I thrive on this kind of excitement," he told the Atlanta paper. "I anticipated this was going to be a tough year, so I wanted to do everything we could to get top-line growth."

Yet times weren't always so challenging for The Home Depot. In the latter half of the '90s when the economy was riding high, The Home Depot grew into a multibillion-dollar global business with the highest sales-per-square-foot in the industry. Since then, the company has ranked among the top retailers in the world with annual sales of $45.7 billion, and has become a mature, thriving retailer. However, for the first time in 15 years, the company received a rude awakening during the last fourth quarter with an earnings decline. Nardelli told analysts in a February quarterly conference call that the company was working to increase store productivity in light of turbulent economic times.

"Caution is in our outlook, but I would reinforce that we are being extremely aggressive in running our business for sales and for productivity," Nardelli said.

Analyst Danielle Fox of J.P. Morgan said that while Nardelli hasn't significantly altered The Home Depot's retail strategy, he has shifted emphasis to operational issues and projects that had been lower in priority, such as distribution network initiatives and the Service Performance Improvement (SPI) program, which involves increased night stocking so associates have more time to assist customers during prime business hours. The SPI program, tested last year in the Atlanta market, will be rolled out to most Home Depot stores this year.

"In an environment as robust as the one we had in the United States over the past few years, programs that focused on operations in particular were put on the back burner, Right now, that's Bob Nardelli's opportunity," Fox said.

Fox added that Nardelli appeared focused on recalibrating existing strategy rather than giving his own spin to how The Home Depot should develop, which makes sense for a retailer with a proven concept.

"This is a highly successful company that needs firm direction in a challenging environment, and Bob Nardelli is providing this direction. He brings a more formal management style to The Home Depot at an important juncture in the company's growth trajectory," she said.

Retail consultant Jeff Corcoran, executive director of the Schenectady County Community Business Center in New York, near GE Power Systems headquarters, has been impressed with Nardelli's track record. He said Nardelli's ability to grow and manage that division of GE into a $15 billion global business will be a significant advantage for The Home Depot, which, in addition to Mexico, has stores in four other foreign countries: Canada, Puerto Rico, Chile and Argentina.

"U.S. retailers are not terribly experienced at managing a global empire," said Corcoran. "In Nardelli, they get supply chain expertise and proven management of a global enterprise."

In fact, Nardelli has given supply chain initiatives top priority. The company is experimenting with online supply auctions, increasing its direct imports and creating a team to identify distribution cost-reduction opportunities. The SPI program, although initiated prior to Nardelli's arrival, has aided by cutting delivery time up to 50% in the test market.

One of Nardelli's first executive moves in January was to realign the company's management structure, flattening out the organization and having more executives report directly to him.

The 52-year-old ceo has also focused on growing several lucrative areas for The Home Depot revenue, including the pro initiative program, its on-line store that recently expanded nationwide, appliance sales, proprietary brand programs and hot product trends. A prime example of the latter is the high profile Home Depot has given to energy-savings products such as compact fluorescent lighting. Nardelli said unit sales of these products have risen seven-fold in markets such as California impacted by higher fuel costs and the energy shortage. Beyond its flagship warehouse stores, The Home Depot will continue to explore other growth opportunities.

"We will certainly continue to optimize the mix by growing Expo, adding new creative ideas like Villager's Hardware and the Floor Store and looking at opportunities for international business," Nardelli said.

Nardelli has spent the past several months immersing himself in The Home Depot education. In his visits to stores across the country, his infectious enthusiasm has been well received by associates. One manager of an Expo Design Center in Dallas said Nardelli's genuine interest struck him; he walked directly up to associates and asked numerous questions.

Many describe Nardelli as down-to-earth and genuinely interested in others. Bob Taylor, dean of the College of Business and Public Administration at the University of Louisville, where Nardelli earned a master's degree in business, has known Nardelli about six years. Each year, Nardelli has participated in the school's national visiting committee program in which ceos of major companies lend their expertise to aid faculty in developing a curriculum.

"You'd never know he was a ceo. He's just a person; when he meets people in a social setting, it's clear he is interested in getting to know them. He is a person who is constantly learning by asking questions and listening," Taylor said.

Intense, incredibly bright and focused are other words that Taylor used to describe Nardelli. Taylor was impressed with Nardelli's secret to learning about the Internet business while running GE Power Systems--he enlisted the help of a 22-year-old computer whiz from GE as his mentor.

"What he doesn't know he will learn so quickly that you will think he had known it," Taylor said of Nardelli. "My sense is that he will be one of the quickest studies of retail you'll find."

Nardelli applied the same passion to his work during his tenure at GE, which began in 1971 after he graduated from the University of Louisville with a master's degree in business administration. He advanced through the company's appliances, lighting and transportation systems business units. He left the company for a three-year period to work at Case Corporation, then returned in 1991 as president and ceo of GE's Canadian appliance manufacturing division. He later headed GE's transportation systems, doubling revenue for that division. In 1995, he was promoted to president and ceo of GE Power Systems.

Under Nardelli's leadership, revenue at GE grew from $6.5 billion in 1995 to $14.5 billion last year. More than half of this revenue came from products that weren't part of the business at the time Nardelli started. He engineered the division's revival by expanding the company from production of turbines and generators to becoming a premier supplier of product and service solutions for the energy generation industry.

Nardelli's leadership talents also earned him the honor of Executive of the Year in 2000 from the Schenectady County Chamber of Commerce and the Capital District Business Review.

Before being recruited by The Home Depot, Nardelli was considered a likely successor to GE chief Jack Welch, who had announced his retirement. In November, fellow GE executive Jeffrey Immelt received the coveted title.