Mattel’s American Girl brand celebrates its 40th anniversary, and dolls enter a new era

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

The air smells faintly of vanilla. Young girls clutch miniature shirts and sequined shoes as they hop between doll displays. Beneath a glittering chandelier, the brand’s iconic red boxes are lined up on shelves with museum-like precision. Hair dryers hum in the doll salon, and downstairs, pink frosted cupcakes are placed on a cafe table in front of a doll sitting upright in a miniature high chair.

“It feels timeless,” said Jamie Sigielman, global head of dolls. mattelthe brand’s parent company.

But behind the scenes, the American Girl doll business is not what it once was.

As American Girl turns 40, it faces more modern challenges, including digital competition, changing play patterns, an aging customer base, and increased cost consciousness.

“This anniversary comes at a perilous time for American Girl and the doll industry as a whole,” said Jamie Katz, a Mattel analyst at Morningstar. “Children’s play is becoming increasingly digital, and the[American Girl]brand is struggling.”

At its peak about a decade ago, American Girl was generating more than $600 million in annual sales. By 2023, annual sales had fallen to about $200 million. This is only one third of the previous level.

Although American Girl has shrunk significantly since the mid-2010s, the brand has recently posted five consecutive quarters of sales growth and is one of the few consistently performing brands in 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, lower than Wall Street expectations after weaker-than-expected holiday demand and heavy discounting weighed on profit margins. Earnings per share similarly fell short, and Mattel announced a lower-than-expected profit forecast for 2026.

Mattel shares have fallen about 19% since the Feb. 10 report, and are down about 20% over the past year. city and JP Morgan The stock price was also lowered after the earnings report.

“People are looking at Mattel this year…waiting with bated breath because they’re spending a lot of money and it doesn’t seem like they’re going to make a lot of money,” Katz said.

Even before the coronavirus pandemic forced American Girl to reduce its retail footprint from about 15 stores in 2019 to seven stores in the U.S. now, the brand: target’s “Our Generation” line.

Prices for a traditional 18-inch American Girl typically start at $135, not including accessories, and can go as high as $250 for a bunk bed or $275 for a beach cruiser.

Laura Tretter, co-host of the podcast “American Girl Women,” said premium prices were once a sign of quality and prestige to many parents. But the customer base is shrinking in an inflation-conscious environment, Katz said.

“Parents are now being more cautious about discretionary spending,” Katz said. “That price point[for an American Girl doll]would seem high to many families.”

Across the toy industry, companies include competitors such as: hasbrois grappling with how to get children interested in its products, especially amid the uneven consumer spending and recent trade uncertainties.

“Today, there are so many things that kids want to play with,” Cygilman told CNBC. “There is also more competition today, and we have seen in the past that tariffs can impact the toy market, but we are adapting to that.”

For many children, play has shifted to tablets, game subscriptions, and short videos.

“The definition of ‘toy’ has changed,” Katz says. “iPads and Nintendo Switches compete directly with dolls. There are just more charges for the same discretionary amount.”

Overall, Mattel’s doll and toddler categories have faced steady decline over the past three quarters, even after the halo effect of the 2023 Barbie movie. Global doll sales fell 7% in the latest quarter, with the infant, toddler, and preschool category down 17%.

Slumping sales of American Girl and Mattel’s Fisher-Price brands prompted activist investor Barrington Capital to rationalize its portfolio and improve profitability in 2024, raising the possibility of selling the brands.

“American Girl is not a huge part of Mattel’s overall financials,” Katz said. “Still, for investors, the question isn’t whether a brand is loved; it’s whether it’s strategically essential. This has been a drag on profits.”

Inside Rockefeller Center, these industry headwinds feel far away.

During a recent visit, Lisa Kandosky stood staring at Molly McIntyre. Molly McIntyre was a World War II-era heroine adorned with round wire-rimmed glasses, a navy argyle sweater, and braids tied with red ribbon. It was exactly the same doll that Kandosky’s grandmother had placed under the Christmas tree in 1990.

“This is not just a doll,” Kandosky, now 40, told CNBC, her eyes misty-eyed. “When I was a child, I somehow realized the influence that Molly had on me. She taught me that you could be brave when the world was scary, that you could ‘do your part’ even at a young age. She shaped who I am.”

American Girl’s emotional alchemy has defined American Girl since it revolutionized the doll industry in 1986. At that time, the market was dominated by either fashion dolls that reflected the adult figure or baby dolls that recreated motherhood.

The six original American Girl characters (Samantha, Kirsten, Molly, Felicity, Addie, and Josefina) came with books that tackled themes rarely taught to young children, such as child labor and racism, and all dolls treated girlhood itself as a formative stage.

“American Girl remains a moral compass for many of us,” Tretter said on the “American Girl Women” podcast. “I’m glad 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 destination retail, and has diversified its characters, like Raquel Reyes, a biracial DJ named 2026’s “Girl of the Year” and an animal rights activist who helps run her family’s Kansas City paleta store.

Justin Orlovsky-Schnitzler, a folklorist and author of “An American Girl Anthology: Finding Ourselves in the Pleasant Company Universe,” says the brand’s whimsical seriousness became a differentiator and fostered loyalty across generations.

Look no further than Doll Hospital. There, “doctors” in white coats triage patients, adjust wheelchairs, perform eye exams, and apply miniature casts to doll owners of all ages.

“That’s why people keep coming back,” Orlovsky-Schnitzler said. “You’re not just buying plastic or fabric. You’re revisiting a version of yourself.”

And even though the dolls are preserved in the innocence of childhood, their original owners continue to return to American Girl through podcasts, memes, cosplay, and fan fiction now that they’re adults.

Some people pass down their dolls to their children. Some people buy new ones for themselves.

“There’s something powerful about handing your daughter the doll that once slept next to her,” Orlovsky-Schnitzler said. “It’s just as comforting to go back to your youth with your own dolls.”

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

So-called “kidalt” consumers, adults who buy toys for themselves, have become a coveted demographic. According to market research firm Sarkana, by the end of 2024, adults aged 18 and over will spend more on toys than children aged 3 to 5. This cohort continued to drive industry growth in 2025.

Mattel seeks to monetize its intellectual property through publishing, collectibles, entertainment, and digital platforms. Mattel CEO Inon Kreiz said in an interview and on a call with investors that mobile gaming and interactive platforms are particularly promising areas.

But “nostalgia needs to translate into sustainable revenue and sales growth,” Katz said. If you lean too much towards adult collectors, your brand risks “aging with your original audience.” If the company shifts too aggressively to digital trends, “there is a risk of diluting its character.”

Our competitors are doing the same thing. Lego, for example, continues to release bricklaying sets for adults, including collectibles based on flowers, art, and millennial pop culture favorites such as the hit 1990s TV show “Friends.”

For “American Girl,” the 40th anniversary provides a natural tipping point to strike a balance between children and adult fans, Cygielman said.

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

At the same time, the brand strives to maintain the interest of the next generation through modern “Girl of the Year” storylines and investments in digital platforms such as YouTube, TikTok and “American Girl World.” roblox.

“Nostalgia is the gateway, not the final step,” Cygielman said. “The question is how do you extend that emotional equity to new platforms and new audiences?”