Paul Marchant, chief executive of fast fashion retailer Primark, has resigned with immediate effect following an allegation about his behaviour towards a woman in a social setting.

Parent company Associated British Foods (ABF) announced on Monday that Marchant had acknowledged an "error of judgement" and accepted that his actions fell below the standards expected by the company.

George Weston, chief executive of ABF, expressed his disappointment at the situation. "I am immensely disappointed. At ABF, we believe that high standards of integrity are essential," he 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 led by external lawyers after the allegation was made. He has since apologised to the individual concerned, the ABF board, and his Primark colleagues.

Primark, which has over 450 stores across 17 countries in Europe and the United States, contributes approximately half of ABF's profits. Under Marchant's 15-year leadership, the retailer's operating profit grew from about £250 million to over £1 billion.

The news caused ABF's shares to fall by 4.2 per cent on Monday morning, making it the biggest faller on the FTSE 100 index.

Eoin Tonge, ABF's finance director, will take over as interim chief executive of Primark, working alongside the senior management team and Strategic Advisory Board. Joana Edwards, ABF's financial controller, will step in as interim finance director.

Shore Capital analysts commented on the departure, saying: "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."

Marchant joined Primark as chief operating officer in 2009 before becoming chief executive later that year, taking over from founder Arthur Ryan. His previous experience included roles at Debenhams, Topman, River Island and New Look.

ABF has stated that it "seeks to provide a safe, respectful, and inclusive work environment where all employees and third parties are treated with dignity and respect" and that it will continue to offer support to the individual who brought the behaviour to its attention.

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