Ralph finds employment for Kate working for a fashionable milliner, Madame Mantalini. Her husband, Mr Mantalini, is a gigolo who depends on his (significantly older) wife to supply his extravagant tastes and offends Kate by leering at her. Kate proves initially clumsy at her job, which endears her to the head of the showroom, Miss Knagg, a vain and foolish woman who uses Kate to make herself look better. This backfires when a client prefers to be served by the young and pretty Kate rather than the ageing Miss Knagg. Kate is blamed for the insult, and as a result, Kate is ostracised by the other milliners and left friendless.