The world of retailing was stunned today when the long-standing boss of Primark quit over an “error of judgement” in his behaviour towards a female colleague.
The discount fashion retailer said CEO Paul Marchant resigned “with immediate effect” following an investigation into the incident “in a social environment”. The exact nature of the incident is not known.
Finance director Eoin Tonge will step in as interim CEO while Joana Edwards, group financial controller of parent company Associated British Foods (ABF) will serve as interim Primark finance director.
- See also: Who is Paul Marchant?
Shares in ABF fell around 4% after the news was announced to the stock exchange this morning.
Paul Marchant’s departure follows an investigation, initiated by ABF and carried out by external lawyers, into an allegation made by an individual about inappropriate behaviour towards her in a social environment.
ABF said Marchant, one of Britain’s most powerful and respected retailers, cooperated with the investigation, acknowledged his error of judgement “and accepts that his actions fell below the standards expected by ABF.”
He has apologised “to the individual concerned, the ABF Board and also to his Primark colleagues and others connected to the business.”
ABF said it “seeks to provide a safe, respectful, and inclusive work environment where all employees and third parties are treated with dignity and respect. Primark is committed to doing business the right way at all levels of the company.”
The company sad it “will continue to offer support to the individual who brought this behaviour to its attention.”
George Weston, Chief Executive of ABF, said: “I am immensely disappointed. At ABF, 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.”
The dramatic departure of Paul Marchant will be a huge blow for the business he has run for since 2009 turning it into one of Britain’s most profitable retail chains. He took over that year from Primark founder Arthur Ryan. By the end of last year Primark had 459 stores across 17 countries including a flagship on Oxford Street, and employed 82,000 people.
Last year Primark made a profit of £1.108 billion on sales of £9.45 billion.
Before joining Primark, Marchant was chief operating officer of New Look Retail Group. He also served as trading director for clothing at Debenhams and held buying roles at River Island and Topman.
One retail expert said: ”I am very , very surprised to be honest. Whenever I’ve met in work situations he’s always been highly, highly professional.”
Susannah Streeter, head of money and markets, at investment platform Hargreaves Lansdown said:‘’The change at the top will be unsettling particularly given that Primark delivered a very mixed bag of results at the last count. Primark continues to be the main story for ABF, bringing in around half of the group’s revenue, but performance has been very varied across regions. This leadership upset comes amid weaker consumer sentiment which has meant footfall at its stores has fallen - and the chain has been losing market share in the UK.”
Darren Shirley , retail analyst at Shore Capital said: “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. That said, we concur with the views of Mr., Weston around the bigger factor of dignity and respect being more important than any one person, no matter how senior. “
Thomas Beale, Partner and Head of the Bullying and Harassment Team at law firm Bolt Burdon Kemp, said:"The specifics of the allegation against Primark’s CEO are not yet clear, but his decision to step down suggests the matter is serious. It is vital that Primark conducts a thorough investigation, particularly to determine whether this incident reflects a broader toxic workplace culture among senior staff that could enable other harmful behaviours to persist.
When leaders act inappropriately towards colleagues, it constitutes an abuse of power. In situations like this, it is vital for employers to respond promptly to allegations. This will demonstrate to staff that their concerns are taken seriously and help to prevent similar behaviour in the future.”
Marchant is believed to have spent much if his time at Primark’s headquarters in Dublin or travelling to countries such as France, Spain and Germany where Primark is rapidly expanding. His salary has not been disclosed as he is not a main board member at ABF but he is certain to be on a substantial seven figure package. Lord Wolfson, who runs Next, another mass market retailer that makes a similar level of profit, was paid £4.5 million last year.
