How a historic Philly hat factory was rescued by this 70-year-old cancer survivor from Harlem
After a rough start, American Hats LLC appears well-positioned for dramatic growth, opening on Sept. 19 in the new Fashion District Philadelphia.
The Rev. Georgiette Morgan-Thomas arrives at Philadelphia’s 30th Street Station three mornings a week — usually no later than 7:30 — on an Amtrak train from her home in Harlem.
Next she catches a SEPTA train — or, if the wait for one is too long, an Uber — to Wissinoming, where one of the last remaining hat factories in the country had shut down in December 2015, a situation Morgan-Thomas found impossible to ignore even though she lives in New York.
So she bought the former S&S Hat Co., initially investing $123,000 — “my life’s savings” — not that the nondenominational pastor with a long career in social work had any applicable business experience.
“I didn’t even know how hats were made. I wore them,” Morgan-Thomas said.
Now 70, the native of Mobile, Ala., is stewarding the company, renamed American Hats LLC, which was incorporated in January 2016. It appears well-positioned for growth after a stomach-turning start that included a big customer taking its business to a hatmaker in China.
On Sept. 19, American Hats will open its first full-fledged retail outlet in Fashion District Philadelphia, the shopping, dining, and entertainment remake of the former Gallery mall on East Market Street in Center City.
“Going into the Fashion District will change the game for us,” Morgan-Thomas said recently from behind a desk piled with papers and millinery, in an office tucked behind a showroom of hats in a corner of an 11,000-square-foot workshop just off I-95 that primarily serves wholesale customers and individual designers.
While members of the public can buy hats there a few days a week, the Bridge I-95 Industrial Centre on Fraley Street is by no means a place shoppers would just happen upon. By contrast, a store in the Fashion District, on the highly trafficked concourse level and in a retail setting that will also be open weekends (American Hats’ factory is not), has Morgan-Thomas and her son, Robert James Morgan III, the company’s CEO, expecting sizable financial returns.
“We will triple our revenue by going into the Fashion District,” said Morgan in a phone interview from Virginia, where he lives. Revenues reached $200,000 last year, one year after American Hats became profitable, he said.
The concourse is expected to attract 22 million commuters, 43 million tourists, and 1.5 million Center City residents a year, according to the Fashion District’s director of marketing, Erika Joy Erb.
American Hats will join three other small businesses there as the inaugural tenants of Uniquely Philly, an incubator of sorts the Fashion District, a joint venture of PREIT and Macerich, is offering to help local companies establish and grow their brands.
“We’re really promoting what makes Philly unique," Erb said of the incubator, which plans to admit additional businesses when the first group moves on.
American Hats’ inclusion in Uniquely Philly’s first cohort was based on not only its “works of art" but its “very compelling” story, Erb said.
It’s a story that began in the neighborhood where American Hats will soon have a shop. Morgan-Thomas has traced S&S’s origins to 1923, a factory on Filbert Street between 10th and 11th Streets, currently the site of the Greyhound Bus Terminal. American Hats’ two-year lease in the Fashion District is for a site near Filbert and 10th, Morgan-Thomas said.
“We’ve been fighting, hanging on,” she said, mentioning job cuts early on at the company that now employs 12 and additional investment of personal funds during slow seasons to meet payroll and to pay for materials and factory renovations.
In a sense, this rescue mission is a labor of love for a woman who began wearing hats at the age of 12 and, as an adult, bought many made at S&S.
“S&S Hats was the premier hat company here in Philadelphia for women,” Morgan-Thomas said. “S&S had a wonderful history and legacy, was well-respected and highly thought of.”
But like many manufacturers in what was Ben Franklin’s robust city of makers, S&S started to falter from what Morgan-Thomas said was a combination of cheaper competition from overseas companies and its own operational deficiencies. A friend who was a hat designer for S&S first alerted Morgan-Thomas to its problems in 2013, which resulted in the factory being sold by the IRS, she said.
The subsequent owner, a man who had his own hat shop in South Jersey and had been a customer of S&S, would lose interest in it after about a year, complaining of the money drain it had become, Morgan-Thomas said.
When she bought it at the end of 2015, the grandmother of two who had survived two bouts of cancer — ovarian in 1987 and cervical in 1995 — was a director of Harlem services at Goddard Riverside Community Center. The New York nonprofit focused on housing for populations difficult to accommodate, including individuals with mental illness. She retired in May 2016 after 20 years there to devote her full attention to a hat factory about 100 miles away.
“This was a calculated risk. ... I was looking for something to do as a retired person, where I could still work, but I could be working and enjoying it,” Morgan-Thomas said. “But at my age, I didn’t want to go into debt. I didn’t want a big headache and stress. The risk did not seem that astronomical.”
Her decision would seem a little less sure-footed, she said, when that big regular customer of S&S — a women’s apparel company in New York — took its hat orders, usually a minimum of about $100,000 a year, to China in the spring of 2017. “That almost shut me down,” Morgan-Thomas said.
“I was devastated," she said. "... I thought I was making a good business decision because they were on the table and I knew there was revenue there to sustain the factory. The amount of money I projected we would get from them would pay salaries and overhead of this factory ... until we started to create some new streams of income.”
She adjusted the business plan, doing fewer rhinestone-laden hats older women would wear to church and more casual daily hats “geared for young women, like fedoras." American Hats opened a showroom on historic Strivers’ Row in Harlem in November 2017, selling mostly to young women a couple of days a week or by appointment.
American Hats also created a line of untrimmed hats that designers could buy and “put as much stuff on it as they want to,” she said. Margins on those hats are greater than the fully trimmed ones, Morgan-Thomas said.
Online sales have helped, she said, but what is needed is the kind of daily, high-profile exposure the Fashion District will provide, said women’s clothing designer Kevin Love of KE Collection in Germantown.
Love has been featuring American Hats’ creations in shows, he said, to help save “a dying art” and a factory that should be a point of pride for Philadelphia.
Morgan-Thomas doesn’t sugarcoat how tough the going has been.
“It’s been a serious struggle,” she said. “I fought for this factory real hard, but it’s with joy. I don’t feel stressed. ... It’s all been a part of a journey that has just only strengthened me.”