Mattel’s American Girl brand turns 40, and the dolls are entering a new era

The flagship American Girl Place in New York City’s Rockefeller Center feels frozen in time.

The air smells faintly of vanilla. Little girls rush among the doll displays, clutching tiny embroidered shirts and shoes. Beneath the sparkling chandeliers, the brand’s signature red boxes line the shelves with museum-like precision. Hair dryers blare in the doll salon, and downstairs, frosted pink cakes land on the café tables before the dolls sit upright in their miniature bar stools.

“It feels timeless,” said Jamie Siegelman, global head of puppets at the company. Mattelthe brand’s parent company.

However, behind the scenes, the American Girl doll business isn’t what it used to be.

As American Girl turns 40, the brand faces more modern challenges: digital competition, changing patterns of play, and an aging and more cost-conscious customer base.

“The anniversary is a fraught moment for American Girl and the entire doll industry,” said Jaime Katz, an analyst who covers Mattel for Morningstar. “Children are more digital at play, and [American Girl] The brand has struggled.”

About a decade ago, at its peak, American Girl was reporting annual sales of more than $600 million. By 2023, annual sales had fallen to nearly $200 million, just a third of previous levels.

While American Girl has shrunk significantly since mid-2010, the brand has recently posted five consecutive quarters of sales growth — and is one of the few consistent performers within Mattel’s portfolio.

“Growing from a base that’s down more than 60% doesn’t mean the brand is coming back. It means it’s stabilizing,” Katz told CNBC.

Earlier this month, Mattel reported fourth-quarter sales of $1.77 billion, falling short of Wall Street expectations after holiday demand came in lower than expected and deep cuts weighed on margins. Likewise, earnings per share fell, and Mattel issued a lower-than-expected 2026 earnings forecast.

Mattel shares are down about 19% since the Feb. 10 report and are down about 20% over the past year. City and JP Morgan The stock was also downgraded after the results.

“People are watching Mattel this year… they’re waiting impatiently because they’re spending a lot and it seems unlikely they’ll make big profits,” Katz said.

Even before the COVID pandemic forced American Girl to shrink its retail footprint from about 15 stores in 2019 to seven U.S. locations today, the brand faced increasing competition from lower-priced alternatives at big-box retailers like the goal “Our Generation” line.

A traditional 18-inch American Girl typically starts at $135, excluding accessories, which can cost up to $250 for a bunk bed or $275 for a beach cruiser.

For many parents, the premium price signaled a sign of quality and prestige, said Laura Tretter, co-host of American Girl Women. But in an inflation-conscious environment, that has narrowed the customer base, Katz said.

“Parents are more selective about discretionary spending right now,” Katz said. “This price point [for an American Girl doll] “It seems too steep for many families.”

Throughout the gaming industry, companies, including competitors, like to… Hasbrois grappling with how to get kids interested in its products, especially in light of uneven consumer spending and, more recently, trade uncertainty.

“There are a lot of things today that a child might be tempted to play with,” Siegelman told CNBC. “There is also more competition today, and we have seen in the past that tariffs can have an impact on the gaming market, but we are adapting.”

For many kids, play has moved toward tablets, game subscriptions, and short-form video.

“The definition of ‘toy’ has changed,” Katz said. “An iPad or Nintendo Switch competes directly with a doll. There are simply more claims on the same discretionary dollar.”

Overall, Mattel’s doll and preschool categories have faced steady declines over the past three quarters, even after the corona effect of the 2023 “Barbie” movie. Global doll sales fell 7% last quarter, while the infant, toddler and preschool segment fell 17%.

Faltering sales of the American Girl brand and Mattel’s Fisher Price prompted activist investor Barington Capital in 2024 to push the company to simplify its portfolio and improve returns, potentially floating the brands’ sale potential.

“American Girl is not a big part of Mattel’s overall financial profile,” Katz said. “However, for investors, the question is not whether the brand is likable. It is whether it is strategically necessary. That has been a drag on profits.”

Inside the Rockefeller Center store, industry headwinds seem distant.

On a recent visit, Lisa Kandosky stood staring at Molly McIntyre — a World War II-era heroine decked out in round, wire-rimmed glasses, a navy blue sweater and pigtails tied with red ribbons — just like the doll that Kandosky said her grandmother placed under the Christmas tree in 1990.

“It’s not just a doll,” Kandoski, 40, told CNBC, her eyes misty. “I kind of realized the influence Molly had on me when I was a kid. She taught me that you could be brave even when the world was scary, and that you could ‘do your part’ even when I was little. She shaped my identity.”

This emotional alchemy has defined the American Girl character since she disrupted the doll industry in 1986. At the time, fashion dolls that reflected coming of age or baby dolls that rehearsed motherhood dominated the market.

The six original American Girl characters — Samantha, Kirsten, Molly, Felicity, Addie, and Josefina — came with books that dealt with topics rarely taught to young children like child labor or racism, and all of the dolls treated childhood itself as a formative stage.

“American Girl remains a moral compass for many of us,” said Tretter of the American Girl Women podcast. “I love that girls today are still receiving positive messages about inclusivity, friendship, and going through difficult changes.”

Over time, American Girl has expanded into publishing, film, and retail while diversifying its personas, as with 2026’s “Girl of the Year,” Raquel Reyes, a biracial DJ and animal rescuer who helps run her family’s Palita store in Kansas City.

The brand’s quirky seriousness became a differentiator and fostered generational loyalty, said Justine Orlowski Schnitzler, a folklorist and author of “An American Girl Anthology: Finding Ourselves in the Pleasant Company Universe.”

Look no further than the Doll Hospital where white-robed “doctors” triage patients, fit wheelchairs, perform eye exams, and apply miniature casts for dollhouse owners of all ages.

“That’s why people come back,” Orlowski Schnitzler said. “You’re not just buying plastic and fabric. You’re revisiting a version of yourself.”

Although the dolls remain preserved in childhood innocence, their original owners, now grown, continue to return to American Girl through podcasts, memes, cosplay, and fan fiction.

Some pass their dolls on to their children. Others buy new products for themselves.

“There’s something powerful about giving your daughter the doll you once slept next to,” Orlowski-Schnitzler said. “It’s also so relaxing to go back to your younger days with your own doll.”

Mattel is struggling to turn that nostalgia into broader sales growth.

So-called “children” consumers – adults who buy toys for themselves – have become a desirable demographic. By late 2024, gaming spending by adults ages 18 and older has surpassed that of children ages 3 to 5, according to market research firm Circana. This group will continue to drive industry growth in 2025.

Mattel increasingly seeks to monetize its intellectual property through publishing, collectibles, entertainment and digital platforms. In interviews and calls with investors, Mattel CEO Ynon Kreiz has said that mobile gaming and interactive platforms are particularly promising areas.

However, “nostalgia must translate into lasting growth in revenues and sales,” Katz said. Relying too heavily on adult collectors risks putting the brand at risk of “aging along with its original audience.” Focusing too heavily on digital trends “runs the risk of diluting what made them special.”

Competitors were doing the same thing. For example, Lego continues to release more brick building sets aimed at adults such as flowers, artwork and collectibles based on millennial pop culture favorites such as the 1990s TV series “Friends.”

For American Girl, its 40th anniversary provides a natural inflection point for balancing child and adult fans, Siegelman said.

American Girl launches modern versions of its six original characters and publishes its first adult book, centered on Samantha Parkington and set during her coming of age in the 1920s.

Meanwhile, the brand is working to keep the next generation engaged through contemporary “Girl of the Year” stories and investments in digital platforms, including YouTube, TikTok and American Girl World on Roblox.

“Nostalgia is the entry point, not the endgame,” Siegelman said. “The question is how we can extend this emotional equality to new platforms and new audiences.”