Mattel’s American Girl brand turns 40, dolls enter a new era

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

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.

“It feels timeless,” said Jamie Cygielman, global head of dolls for Mattel, the brand’s parent company.

And yet, behind the scenes, the business of American Girl dolls is not what it once was.

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.

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

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.

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.

“Growing off 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, 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.

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

“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,” Katz said.

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 Target’s “Our Generation” line.

A traditional, 18-inch American Girl typically starts at $135, excluding accessories, which can cost as…