When Denise discovers a baby boy abandoned in the ladieswear department, Moray seizes on "The Paradise baby" as a marketing opportunity. Denise's sales soar, further antagonizing Clara, who is more anxious than usual about her commission. Denise suggests that collection tins for the baby be distributed in every department.
Under orders from Moray, the staff cares for the baby until Peter Adler, Moray's friend and the patron of a foundling home, can take him in. Katherine meets the handsome Adler and impresses him with her charm and her natural way with children. Moray agrees to let Adler bring a group of his foundling children to visit the store. Eager to please, Katherine goes out of her way to care for the children and beguiles Adler in the process. But when the children descend on ladieswear, Clara expresses disdain for the "filthy little things." Katherine offers to fit each child from the foundling home with new uniforms.
The visit sparks another idea in Denise: The Paradise should offer a children's department. Yet Miss Audrey, fearful of Denise's ambitions, tells Denise that she chose work over marriage, and that she will never allow her work to be taken away. She bans Denise from having any more ideas. To ensure that her idea reaches Moray, Denise cunningly suggests it to Katherine. When Katherine expresses interest in becoming the foundling home's benefactor and Moray belittles her, she presents the children's department idea to humiliate him in return, suggesting that someone as shallow as she, and even a lowly shopgirl, are ahead of his game.
Clara’s disdain for the foundlings cruelly extends to Arthur when she denigrates his dead mother, but she softens to one of the girls during their uniform fitting. Denise sees her steal money from the collection tin, and Clara is forced to admit her secret: one of the girls, Grace, is her daughter. Clara uses her commission to pay for Grace's place at the home until she can get her back, and she stole money from the tin to compensate for her lost commission. But the money is now gone, and she is frantic that without the money, Grace will lose her place at the home, and they can never be reunited.
Clara is not the only one rattled by the baby's arrival -- Arthur, the original child of The Paradise, wants to know the truth about his background, and Miss Audrey, when given charge of the baby, privately reveals a tender wish for motherhood. It's revealed that she and Edmund Lovett have an unresolved history together.
Adler makes a declaration to Katherine, but when she informs Moray that Adler wishes to court her, his reaction is less than she hoped for, and she is furious. Dudley has a heart-to-heart with Moray, encouraging him to move on from his grief and pursue happiness. Yet Moray is more concerned with Denise, angry that she manipulated and embarrassed him by taking her idea to Katherine; he gave her licence to be brilliant and she used it against him. When the two discuss it, alone with the baby, late at night, he realizes that Miss Audrey had blocked Denise, and his anger subsides. He reveals that he's naming the baby Arthur. And Denise suddenly knows who took the money from Clara: Arthur, who stole it in retaliation for the hurtful things Clara said.
With the children present in their new uniforms, The Paradise holds an event handing over the baby to Adler and his new home. At the presentation, Clara overhears Adler telling Katherine that they could have found a home for Grace, but for someone's pure fantasy that her circumstances would change enough to reclaim her child. It may soon be too late for Grace to find a family. Clara makes the ultimate sacrifice and spurns her beloved girl.