By Joe Galli

(FORTUNE Magazine) – When we last checked in with Newell Rubbermaid chief Joe Galli in 2002, he was in his second year on the job and had just installed teams of hard-charging young college grads (dubbed "Galli's army") to stock shelves and create displays for the company's wares. This year the program with Wal-Mart, Newell's biggest customer, came to an end amid declining sales of Newell Rubbermaid products (Wal-Mart wouldn't comment on the deal). That's just the latest blow for Galli, 46, who spent 19 years at Black & Decker before job-hopping to dot-coms Amazon and VerticalNet in the late '90s. He was lured to Newell, his first turnaround, in 2001 to clean up after the disastrous Rubbermaid merger. But since then he's missed most of his three-year financial targets by miles and posted half-a-billion dollars in restructuring charges, leaving the stock stuck where it was in October 2001. FORTUNE's Matthew Boyle took on the former college wrestler recently to discuss selling more businesses, the search for new products, and staying optimistic.

Do you have a vision of what the company should be?

We have to transform this company into one that grows earnings through new products. Some say this is a turnaround, but it's not like we can't pay our bills. This is not a company on the brink of bankruptcy. It's more of a transformation than a turnaround.

In terms of the transition, then, what have you accomplished so far?

We've reconfigured the portfolio. We sold off more than $850 million in low-margin businesses. I wish we had sold them in 2001, not 2003. Then we bought two companies, Irwin and Lenox, that represent $650 million in high-margin business with great brands and a stacked new-product pipeline.

Will you sell more businesses?

I would never say we're done.

In the Paper Mate business, of the six new products introduced in 2002, four have been discontinued. In 2003 nine new products generated only $15 million in sales. Why so many misfires?

We haven't changed that business into a new-product business. I'm not pleased with the payback. That's an area in which I would score our performance lower.

Why did [former CEO] Bill Sovey resign as chairman in May? We hear that he was a vocal critic of yours.

That's not something I should comment on. It was a personal decision. I had nothing to do with it.

What are you doing to keep the troops fired up?

Ambiguity breeds anxiety. People want to know where they stand. With all the divestitures, people ask, "Is my business next?" So we are spending a lot of time talking to one division after another. We do about one of those a week around the world.

Has all this been tough on you personally?

Yes. When I joined, I was very optimistic, and I did not recognize the level of restructuring that was necessary. On the other hand, there is a sense of exhilaration when you make the right decision and move forward.

Is the situation at Newell Rubbermaid on your mind 24 hours a day, or is it something you can leave at the office when you're done for the night?

I could probably do a better job of leaving it at the office, but to be honest, my life is wrapped up in it. It's on my mind always.

Any advice to others embarking on turnarounds?

Resist the temptation to be optimistic until you learn how much effort is required. The toughest thing was establishing expectations, then letting people down.

Are there days you think you're ready to retire?

[Laughs] I don't know if I'll be good at retirement.