The chief executive of Primark, one of Europe's biggest fast fashion retailers, has resigned with immediate effect after he admitted an "error of judgment" toward a woman in a social environment.
Paul Marchant, Primark's CEO since 2009, accepted his actions fell below the standards expected, parent-company Associated British Foods said in a statement on Monday, adding that the head of the 14 billion pound ($18 billion) conglomerate said he was "immensely disappointed."
Primark has over 450 stores in 17 countries across Europe and the United States, with Marchant growing operating profit from about 250 million pounds to over a billion pounds and more than doubling its store footprint during his more than 15 years in charge.
Primark, founded in Ireland and with a huge presence on British high streets, contributes about half of group profit to AB Foods, which also owns major grocery, sugar, agriculture and ingredients businesses.
Shares in the parent company fell 4.9% in early trading, compared with a 0.8% drop in Britain's benchmark stock index.
"I am immensely disappointed," ABF CEO George Weston said in a statement. "We believe that high standards of integrity are essential. Acting responsibly is the only way to build and manage a business over the long term."
"Colleagues and others must be treated with respect and dignity. Our culture has to be, and is, bigger than any one individual," Weston noted.
The group said Marchant's exit followed an investigation it initiated that was carried out by external lawyers into an allegation made by an individual about his behavior toward her in a social environment.
AB Foods said Marchant had "cooperated with the investigation, acknowledged his error of judgment and accepts that his actions fell below the standards expected by ABF."
It said he had apologized to the individual concerned, the group's board and also to his Primark colleagues and others connected to the business.
AB Foods said the group would continue to offer support to the individual who brought this behavior to its attention.
Eoin Tonge, AB Foods' finance director, will act as Primark CEO on an interim basis working with the senior Primark management team and Primark's Strategic Advisory Board, while Joana Edwards, AB Foods' financial controller, will act as interim finance director.
"It is, indeed, a very disappointing, to say the least, end for Mr Marchant and all at Primark and ABF, where he has overseen the development of a fine value-based retailer with strong prospects for growth," said Shore Capital analyst Clive Black.
Analysts at Barclays said leading Primark was one of the top roles in U.K. retail and will likely receive a lot of interest from potential candidates.
"But we don't think Primark are in a rush to fill the void until they find the right person to take charge," they said.
AB Foods, which cut its annual sales guidance for Primark in January, is due to publish first-half results on April 29.
