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When Bob Nardelli took over the corner office at home improvement retailer Home Depot Inc. (HD
) in December, 2000, he found a company headed for trouble. Nardelli's own missteps exacerbated the problem: A plan to centralize purchasing led to out-of-stock items early on. Things grew so bad that same-store sales shrank in 2001 and 2002.
Nardelli, 56, the former head of General Electric Co.'s (GE
) Power Systems unit, persevered. He sank $14 billion into renovating outdated stores, investing in new technology such as self-checkout lanes and cordless scan guns, and upgrading merchandise. He expanded into Mexico, China, and other regions to tap the growing homeowner market. And he bet big that aging baby boomers in the U.S. would spruce up their empty nests.
Now those moves are paying off. In the third quarter, sales jumped 13.1%. Nardelli raised his goal for annual profit growth last year to about 20% from 10% to 14%. The company sits on $3.4 billion in cash. With 2005 revenues headed to $80 billion, Home Depot is the No. 2 U.S. retailer after Wal-Mart Stores Inc. (WMT
) Nardelli calls it the "sweetest spot in retailing."