Primark store at the Queens Center mall in Elmhurst, NY.
Melissa Repko | CNBC
The head of fast fashion chain Primark, Paul Marchant, has resigned with immediate effect after he admitted to an “error of judgment” towards a woman in a social situation late last year.
Parent-company Associated British Foods said in a statement on Monday that Marchant had accepted his actions fell below the standards expected, and the CEO of the 14 billion pound ($18 billion) conglomerate said he was “immensely disappointed”.
In his over 15 years in charge of Primark, Marchant grew operating profit fourfold to over a billion pounds, more than doubling its store footprint to over 450 stores in 17 countries across Europe and the United States.
Primark, founded in Ireland and with a huge presence on British high streets, contributes about half of group revenue and profit to AB Foods, which also owns major grocery, sugar, agriculture and ingredients businesses.
Shares in the parent company were trading down 2% on Monday, extending losses this year to 7%
“I am immensely disappointed. At ABF, we believe that high standards of integrity are essential,” CEO George Weston said.
“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.”
Marchant cooperated with an investigation, which was initiated by AB Foods and conducted by external lawyers, “into an allegation made by an individual about his behavior towards her in a social environment.”
Marchant acknowledged his “error of judgment” and accepted that his actions “fell below the standards expected by ABF,” it said.
A spokesperson for AB Foods said that while the woman’s allegation and the related incident was “towards the end of last year”, the company received the lawyers’ report “recently”.
The spokesperson declined to state the nature of Marchant’s indiscretion or to state if the woman concerned was a Primark employee.
AB Foods said Marchant had apologized to the woman concerned, the group’s board and also to his Primark colleagues and others connected to the business.
It said the group would continue to offer support to the woman who brought his behaviour to its attention.
Interim Primark boss
Eoin Tonge, AB Foods’ finance director, will act as Primark CEO on an interim basis working with Primark’s senior management team and its 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,” Shore Capital analyst Clive Black said.
Analysts at Barclays said leading Primark was one of the top roles in UK retail and would 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.
