Paul Marchant, the CEO of budget fashion giant Primark, has stepped down after a company probe into his conduct toward a woman in a “social environment.”

The resignation, effective immediately, was confirmed by Primark’s parent company, Associated British Foods ,ABF, on Monday.

Marchant, who had been at the helm of Primark for 16 years, oversaw the retailer’s expansion across Europe and into the United States.

In a statement, ABF confirmed that Marchant cooperated fully with the investigation, admitted to an error in judgment, and acknowledged that his behavior fell short of the company’s standards.

“He has also issued an apology to the individual involved,” the statement added.

ABF emphasized its ongoing support for the person who reported the incident, although further details were not disclosed.

George Weston, ABF’s CEO, expressed his disappointment, stating, “I am immensely disappointed. Our culture must, and will, be stronger than any one individual.”

Primark, headquartered in Ireland, accounts for nearly half of ABF’s revenue.

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The retailer operates over 450 stores in 17 countries, employing more than 80,000 people globally.

Following Marchant’s departure, ABF’s Chief Financial Officer, Eoin Tonge, will step in as interim CEO.

Market analysts suggested that the leadership change could cause uncertainty for Primark, which has recently seen mixed results.

“The disruption at the top is particularly concerning as Primark faced challenges during the last reporting period,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown. “This comes amid a general decline in consumer confidence.”

Primark has also faced criticism in recent years for its environmental impact and labor practices, with environmental groups pointing to the wastefulness of “fast fashion” and human rights organizations highlighting the poor working conditions in some of its supply chains.

Despite these challenges, Primark continues to push for international expansion, including new stores in the UAE, Kuwait, and potentially Bahrain and Qatar, in partnership with a franchise operator.

However, the uncertainty surrounding Marchant’s departure could slow the pace of this growth, analysts warn.

ABF shares fell by 2% in afternoon trading on the FTSE 100 index in response to the leadership shakeup.

Reported by Channels Television