Mattel's American Girl brand turns 40 and the dolls enter a new era

The iconic American Girl Place in New York City's Rockefeller Center appears frozen in time.

The air smells faintly of vanilla. Girls run between the doll displays clutching miniature shirts and sequined shoes. Beneath gleaming chandeliers, the brand's iconic red boxes line the shelves with museum-like precision. Hair dryers whir in the Doll's Salon, and downstairs, cupcakes with pink frosting land on cafe tables before dolls sitting upright in their miniature high chairs.

“It looks timeless,” said Jamie Cygielman, global director of dolls at Mattelthe parent company of the brand.

And yet, behind the scenes, the American Girl doll business isn't what it once was.

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

“The anniversary is at a precarious time for American Girl and the entire doll industry,” said Jaime Katz, an analyst who covers Mattel for Morningstar. “Children play more digitally and [American Girl] “The brand has had problems.”

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

While American Girl has shrunk considerably since the mid-2010s, the brand has more recently posted five consecutive quarters of sales growth, one of the few with stable performance within Mattel's portfolio.

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

Earlier this month, Mattel reported fourth-quarter sales of $1.77 billion, missing Wall Street expectations after holiday demand was lower than projected and higher discounts hit margins. Earnings per share were also short, and Mattel issued a lower-than-expected earnings forecast for 2026.

Mattel shares have fallen about 19% since the Feb. 10 report and are down about 20% over the past year. Citi and JPMorgan He also downgraded the stock after the results.

“People are watching Mattel this year…waiting with bated breath, because they're spending a ton and it seems unlikely they're going to make a big profit,” Katz said.

Even before the Covid pandemic forced American Girl to reduce its retail presence from about 15 stores in 2019 to seven US locations today, the brand faced increasing competition from lower-priced alternatives at big box retailers like aim Line “Our Generation”.

A traditional 18-inch American Girl typically starts at $135, not including accessories, which can cost up to $250 for a bunk bed or $275 for a beach cruiser.

The premium price was once a sign to many parents of quality and prestige, said Laura Tretter, co-host of the American Girl Women podcast. But in an inflation-conscious environment, the customer base has shrunk, Katz said.

“Parents are more selective about discretionary spending right now,” Katz said. “That price [for an American Girl doll] “Many households find it expensive.”

Throughout the toy industry, companies, including competitors like HasbroThey are grappling with how to get kids interested in their products, particularly amid uneven consumer spending and, recently, business uncertainty.

“Nowadays there are a lot more things that a child might be drawn to play with,” Cygielman told CNBC. “Nowadays there is also more competition and we have seen in the past that tariffs can have an impact on the toy market, but we adapt.”

For many kids, play has migrated toward tablets, game subscriptions, and short-form videos.

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

Overall, Mattel's doll and preschool categories have faced steady declines over the past three quarters, even after the halo effect of the 2023 “Barbie” movie. Global doll sales fell 7% in the latest quarter, while the baby, toddler and preschool segment declined 17%.

Difficulties in sales of American Girl and Mattel's Fisher Price brand motivated activist investor Barington Capital in 2024 to pressure the company to rationalize its portfolio and improve profitability, raising the possibility of selling the brands.

“American Girl is not a big part of Mattel's overall financial profile,” Katz said. “For investors, however, the question is not whether the brand is beloved. It's whether it is strategically essential. It was a drag on profits.”

Inside the Rockefeller Center tent, those industry headwinds feel distant.

On a recent visit, Lisa Kandoski stared at Molly McIntire, the World War II heroine adorned with round wire-rimmed glasses, a navy blue argyle sweater and braids tied with red ribbons, just like the doll Kandoski said her grandmother put under the Christmas tree in 1990.

“It's not just a doll,” Kandoski, now 40, told CNBC, his eyes misty. “I kind of realized the impact Molly had on me as a child. She taught me that you could be brave even when the world was scary, that you could 'do your part' even when you were little. She shaped who I am.”

That emotional alchemy has defined American Girl since she revolutionized the doll industry in 1986. At the time, the market was dominated by fashion dolls that reflected adulthood or baby dolls that rehearsed motherhood.

The six original American Girl characters (Samantha, Kirsten, Molly, Felicity, Addy, and Josefina) came with books that addressed topics rarely taught to young children, such as child labor or racism, and all of the dolls treated childhood itself as a formative time.

“American Girl remains a moral compass for many of us,” said Tretter of the American Girl Women podcast. “I love that girls today continue to receive positive messages about inclusion, friendship and difficult changes.”

Over time, American Girl expanded into publishing, film, and retail, while diversifying its characters, such as 2026's “Girl of the Year,” Raquel Reyes, a biracial DJ and animal rescuer who helps run her family's popsicle shop in Kansas City.

The brand's whimsical seriousness became a differentiator and fostered generational loyalty, said Justine Orlovsky-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-coated “doctors” triage patients, adjust wheelchairs, perform vision exams, and apply miniature casts for doll owners of all ages.

“That's why people come back,” says Orlovsky-Schnitzler. “You're not just buying plastic and fabric. You're checking out a version of yourself.”

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

Some pass their dolls on to their children. Others buy new ones.

“There's something powerful about handing your daughter the doll you once slept with,” Orlovsky-Schnitzler said. “It's also just as comforting to go back to the time of your youth with your own doll.”

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

So-called “child” consumers (adults who buy toys for themselves) have become a coveted demographic. By the end of 2024, spending on toys for adults 18 and older had surpassed that of children ages 3 to 5, according to market research firm Circana. That cohort continued to drive industry growth in 2025.

Mattel has increasingly sought 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 games and interactive platforms are especially promising areas.

However, “nostalgia must translate into lasting revenue and sales growth,” Katz said. If it leans too much toward adult collectors, the brand risks “aging along with its original audience.” If you pivot too aggressively toward digital trends, “you run the risk of diluting what made you distinctive.”

Competitors have been doing the same. For example, Lego continues to release more brick-building sets aimed at adults, such as flowers, art and collectibles based on millennial pop culture favorites such as the '90s TV hit “Friends.”

For American Girl, its 40th anniversary offers a natural turning point in striking a balance between child and adult fans, Cygielman said.

American Girl is launching modernized versions of its six original characters and publishing its first adult book, centered on Samantha Parkington and set during her adulthood in the 1920s.

At the same time, 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” in Roblox.

“Nostalgia is an entry point, not the end,” Cygielman said. “The question is how do we extend that emotional equity to new platforms and new audiences?”