<div id="readability-page-1"><span></span><div id="ArticleBody-InlineImage-108265314"><div><div><p>The original six American Girl historical characters — Kirsten Larson, Samantha Parkington, Molly McIntire, Felicity Merriman, Addy Walker and Josefina Montoya — are displayed at the brand’s flagship store,</p><p>Luke Fountain</p></div></div></div><div><p>The flagship American Girl Place at Rockefeller Center in New York City feels frozen in time.</p><p>The air smells faintly of vanilla. Young girls dart between doll displays clutching miniature shirts and sequined shoes. Beneath glittering chandeliers, the brand's iconic red boxes line shelves with museum-like precision. Blow dryers hum in the Doll Salon, and downstairs, pink-frosted cupcakes land on cafe tables before dolls sitting upright in their miniature highchairs.</p><p>&#34;It feels timeless,&#34; said Jamie Cygielman, global head of dolls for <span id="RegularArticle-QuoteInBody-4">Mattel<span><span id="-WatchlistDropdown"></span></span></span>, the brand's parent company. </p><p>And yet, behind the scenes, the business of American Girl dolls is not what it once was. </p><p>As American Girl turns 40, the brand is navigating more modern challenges: digital competition, shifting play patterns and an aging, more cost-conscious customer base. </p><p>&#34;The anniversary is at precarious moment for American Girl and the whole doll industry,&#34; said Jaime Katz, an analyst who covers Mattel for Morningstar. &#34;Kids are more digital in play, and the [American Girl] brand has struggled.&#34;</p><p>Around a decade ago, at its peak, American Girl was recording more than $600 million in annual sales. By 2023, annual sales had fallen to roughly $200 million — just a third of prior levels.</p><p>While American Girl has shrunk back considerably from the mid-2010s, the brand has more recently posted five consecutive quarters of sales growth — one of the few steady performers inside Mattel's portfolio. </p><p>&#34;Growing off a base that's down more than 60% doesn't mean the brand is back. It means it's stabilizing,&#34; Katz told CNBC.</p><p>Earlier this month, Mattel reported fourth-quarter sales of $1.77 billion, falling short of Wall Street expectations after holiday demand came in lighter than projected and heavier discounting weighed on margins. Earnings per share likewise fell short, and Mattel issued a lower-than-expect profit forecast for 2026.</p><p>Mattel shares have fallen roughly 19% since the Feb. 10 report and are down about 20% over the past year. <span id="RegularArticle-QuoteInBody-13">Citi<span><span id="-WatchlistDropdown"></span></span></span> and <span id="RegularArticle-QuoteInBody-14">JPMorgan<span><span id="-WatchlistDropdown"></span></span></span> downgraded the stock after the results, too. </p><p>&#34;People are watching Mattel this year ... waiting with baited breath, because they are spending a ton and it seems unlikely they will be bringing in big profits,&#34; Katz said.</p></div><div id="ArticleBody-InlineImage-108265663"><div><div><p>A doll gets her hair washed, brushed and curled at the American Girl Salon at the brand's flagship store in Rockefeller Center.</p><p>Luke Fountain</p></div></div></div><h2>Longstanding issues</h2><div><p>Even before the Covid pandemic forced American Girl to reduce its retail footprint from about 15 stores in 2019 to seven U.S. locations today, the brand faced mounting competition from lower-priced alternatives at big-box retailers like <span id="RegularArticle-QuoteInBody-18">Target's<span><span id="-WatchlistDropdown"></span></span></span> &#34;Our Generation&#34; line. </p><p>A traditional, 18-inch American Girl typically starts at $135, excluding accessories, which can cost as much as $250 for a bunk bed or $275 for a beach cruiser. </p><p>The premium price once signaled to many parents a mark of quality and prestige, said Laura Tretter, co-host of the American Girl Women podcast. But in an inflation-conscious environment, it's narrowed the customer base, Katz said.</p><p>&#34;Parents are more selective about discretionary spending right now,&#34; Katz said. &#34;That price point [for an American Girl doll] looks steep to many households.&#34;</p><p>Across the toy industry, companies, including competitors like <span id="RegularArticle-QuoteInBody-25">Hasbro<span><span id="-WatchlistDropdown"></span></span></span>, are grappling with how to get kids interested in their products, particularly amid uneven consumer spending and, recently, trade uncertainty. </p><p>&#34;There are so many more things today that a kid might be enticed by to play with,&#34; Cygielman told CNBC. &#34;There's also more competition today, and we saw in the past that tariffs can make an impact on the toy market, but we adapt.&#34;</p><p>For many kids, play has migrated toward tablets, gaming subscriptions and short-form video. </p><p>&#34;The definition of 'toy' has changed,&#34; Katz said. &#34;A iPad or Nintendo Switch competes directly with a doll. There are simply more claims on the same discretionary dollar.&#34;</p><p>Overall, Mattel's doll and preschool categories have faced steady declines for the last three quarters, even after the halo effect of 2023's &#34;Barbie&#34; movie. Global dolls sales fell 7% in the latest quarter, while the infant, toddler and preschool segment declined 17%.</p><p>Struggling sales for American Girl and Mattel's Fisher Price brand motivated activist investor Barington Capital in 2024 to push the company to streamline its portfolio and improve returns, floating the possibility of selling off the brands. </p><p>&#34;American Girl is not a huge part of Mattel's overall financial profile,&#34; Katz said. &#34;Still though, for investors, the question isn't whether the brand is beloved. It's whether it's strategically essential. It was a drag on profits.&#34;</p></div><div id="ArticleBody-InlineImage-108265657"><div><div><p>A girl waits with her new Truely Me doll at the American Girl flagship store in Rockefeller Center.</p><p>Luke Fountain</p></div></div></div><h2>Capitalizing on loyalty</h2><div><p>Inside the Rockefeller Center store, those industry headwinds feel distant.</p><p>On a recent visit, Lisa Kandoski stood gazing at Molly McIntire — the World War II-era heroine adorned with round wire-rimmed glasses, a navy argyle sweater and braids tied in red ribbons — just like the doll Kandoski said her grandmother put under the Christmas tree in 1990.</p><p>&#34;It's not just a doll,&#34; Kandoski, now 40, told CNBC, her eyes misty. &#34;I sort of realized the impact Molly had on me as a kid. She taught me that you could be brave even when the world was scary, that you could 'do your part' even when you were small. She shaped who I am.&#34;</p><p>That emotional alchemy has defined American Girl since it disrupted the doll industry in 1986. At the time, the market was dominated by either fashion dolls mirroring adulthood or baby dolls to rehearse motherhood. </p><p>The original six American Girl characters — Samantha, Kirsten, Molly, Felicity, Addy and Josefina — came with books tackling subjects rarely taught to young kids like child labor or racism, and all dolls treated girlhood itself as a formative stage.</p><p>&#34;American Girl remains a moral compass for many of us,&#34; said Tretter of the American Girl Women podcast. &#34;I love that girls today are still getting positive messages about inclusivity, friendship and going through difficult changes.&#34;</p><p>Over time, American Girl expanded into publishing, film and destination retail while diversifying its characters, like with the 2026 &#34;Girl of the Year,&#34; Raquel Reyes, a biracial DJ and animal rescuer who helps run her family's Kansas City paleta shop.</p><p>The brand's whimsical seriousness became a differentiator and fostered generational loyalty, said Justine Orlovsky-Schnitzler, a folklorist and author of &#34;An American Girl Anthology: Finding Ourselves in the Pleasant Company Universe.&#34;</p><p>Look no further than the Doll Hospital where white-coated &#34;doctors&#34; triage patients, fit wheelchairs, perform eye exams, and apply miniature casts for doll owners of all ages.</p><p>&#34;That's why people return,&#34; Orlovsky-Schnitzler said. &#34;You're not just buying plastic and fabric. You're revisiting a version of yourself.&#34;</p><p>And even though the dolls remain preserved in childhood innocence, their original owners, now grown up, keep returning to American Girl through podcasts, memes, cosplay and fan fiction. </p><p>Some pass their dolls down to their children. Others buy new ones for themselves.</p><p>&#34;There's something powerful about handing your daughter the doll you once slept beside,&#34; Orlovsky-Schnitzler said. &#34;It's also just as comforting to go back to the days of your youth with your own doll.&#34; </p></div><div id="ArticleBody-InlineImage-108265653"><div><div><p>American Girl is releasing modernized version of its original six characters for the brand's 40th anniversary.</p><p>Mattel</p></div></div></div><h2>A growing base</h2><div><p>Mattel is battling to convert that nostalgia into broader sales growth. </p><p>So‑called &#34;kidult&#34; consumers — adults who buy toys for themselves — have become a coveted demographic. By late 2024, spending on toys for adults 18 and older had surpassed that for children ages 3 to 5, according to market research firm Circana. That cohort continued to drive industry growth in 2025.</p><p>Mattel has increasingly sought to monetize its intellectual property through publishing, collectibles, entertainment and digital platforms. In interviews and on calls with investors, Mattel CEO Ynon Kreiz has said that mobile games and interactive platforms are particularly promising areas. </p><p>However, &#34;nostalgia must translate into durable revenue and sales growth,&#34; Katz said. Lean too heavily into adult collectors, and a brand risks &#34;aging alongside its original audience.&#34; Pivot too aggressively toward digital trends, and it &#34;risks diluting what made it distinctive.&#34;</p><p>Competitors have been doing the same. For instance, Lego continues to release more brick building sets aimed at adults like flowers, art and collectables based on millennial pop culture favorites such as the 1990s TV hit &#34;Friends.&#34; </p><p>For American Girl, its 40th anniversary offers a natural inflection point to strike a balance between kid and adult fans, Cygielman said.</p><p>American Girl is releasing modernized versions of its original six characters and publishing its first book for adults, centered on Samantha Parkington and set during her adulthood in the 1920s. </p><p>At the same time, the brand is working to keep the next generation engaged through contemporary &#34;Girl of the Year&#34; storylines and investments in digital platforms, including YouTube, TikTok and &#34;American Girl World&#34; on <span id="RegularArticle-QuoteInBody-61">Roblox<span><span id="-WatchlistDropdown"></span></span></span>.</p><p>&#34;Nostalgia is an entry point, not the endgame,&#34; Cygielman said. &#34;The question is how we extend that emotional equity into new platforms and new audiences.&#34;</p></div></div>

<p>As American Girl celebrates its 40th anniversary, Mattel faces challenges with declining sales, now at $200 million from a peak of $600 million. Despite five quarters of growth, the brand struggles against digital competition and a cost-conscious customer base. Mattel's overall sales fell short of expectations, leading to stock downgrades. The premium pricing of American Girl dolls, starting at $135, limits its market amid inflation. The toy industry is adapting to changing play patterns, with competition from digital devices impacting traditional toy sales.</p>

As American Girl turns 40, Mattel grapples with bringing dolls into a new era