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"It's Squidward, silly!"
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Hat Fancy is a shop located at Bikini Bottom Mall. This location appears in the episodes "Whale of a Birthday" and "Mall Girl Pearl." The shop sells hats that are fancy. Hat Fancy is probably in the same business as Hats, however, it probably is a more exclusive shop than the Hats shop, selling fancier, classier hats hence the name.
The outside of Hat Fancy appears to have a big, glass window with glass doors. It also has the words "Hat Fancy" in blue written at the top in green text.
The inside of Hat Fancy can be seen and it appears to be similar to a shoe store except it sells hats.
Hat Fancy is visited by SpongeBob in "Whale of a Birthday" where he bought a straw hat for Pearl. Later, in the episode "Mall Girl Pearl," Hat Fancy can be briefly seen when SpongeBob was following Squidward.
Hat Fancy changes in appearance between the two episodes.
The name "Hat Fancy" is most likely a reference to Cat Fancy, a magazine committed to cats.