Police in the US say they are investigating Sir Philip Green after a fitness instructor claimed she was groped by the Topshop billionaire at a luxury resort.
A woman came forward with a complaint about the businessman on Monday, prompting detectives in Arizona to look into the allegations.
It comes after The Daily Telegraph reported that the 66-year-old's former Pilates instructor, Katie Surridge, said he "spanked" her, touched her inappropriately and made sexual comments at the Canyon Ranch health spa.
Sir Philip's spokesman denied the allegation to the newspaper and said it was dismissed by the resort in Tuscan, Arizona, following an investigation.
Deputy Daniel Jelineo, of Pima County Sheriff's Department, confirmed an investigation was under way following a complaint by Ms Surridge. He said no further information could be given at the early stage of the investigation.
The officer said: "Sir Philip Green, I'm aware of a report that was made to our department yesterday, on the 18th.
"He's being investigated for a criminal offence at this time."
Ms Surridge told The Telegraph, which said she waived her anonymity, that the retail tycoon repeatedly "spanked" her in January 2016 after he entered her studio after a class.
The 37-year-old mother-of-two said she felt "very taken advantage of" and like "a piece of meat there at his disposal".
A spokesman for Sir Philip told the Press Association "nothing was found" against the businessman during Canyon Ranch's investigation and that the matter was dropped.
"In terms of the allegation, it did not happen," he added. "Sir Philip has visited the ranch since that time and has no issues with the management or any of the people there."
A spokeswoman for the resort said it did not "discuss personnel matters out of sensitivity for employee privacy" and declined to comment on the allegations.
"Canyon Ranch does not condone or tolerate inappropriate behaviour towards our employees," she said. "We have strict policies and procedures that prohibit inappropriate behaviour and take prompt, remedial action with respect to inappropriate behaviour allegations reported to us.
"Additionally, Canyon Ranch does not comment on law enforcement matters and decline to do so in this instance."
Sky News previously tracked down the Arcadia owner at the resort to ask him about allegations of sexual harassment and racial abuse.
According to The Telegraph, five of his employees have signed non-disclosure agreements (NDAs) to prevent them speaking about their complaints, with one reportedly being paid more than £1m.
Sir Philip denies his behaviour was criminal or amounted to gross misconduct.