American Girl at 40: Navigating Nostalgia and a Changing Toy Landscape
The flagship American Girl Place in New York City remains a captivating experience, filled with the scent of vanilla and the sight of miniature accessories. But behind the timeless facade, the business of American Girl is facing modern challenges: digital competition, shifting play patterns and a more cost-conscious customer base. As the brand celebrates its 40th anniversary, Mattel is working to stabilize a business that has seen sales fall from a peak of over $600 million around a decade ago to roughly $200 million in 2023.
The Shrinking Doll Market and Shifting Consumer Habits
Even before the pandemic forced store closures, American Girl faced increasing competition from lower-priced doll alternatives, such as Target’s “Our Generation” line. A traditional 18-inch American Girl doll starts at $135, excluding accessories that can add significantly to the cost. This premium price point is becoming a barrier for many families in an environment of increased financial scrutiny.
The toy industry as a whole is grappling with how to capture children’s attention amidst the rise of digital entertainment. Kids are increasingly drawn to tablets, gaming subscriptions, and short-form video content, presenting a direct challenge to traditional toys. As Jaime Katz, an analyst at Morningstar, noted, “The definition of ‘toy’ has changed. An iPad or Nintendo Switch competes directly with a doll.”
Mattel’s Financial Performance and Investor Concerns
Even as American Girl has shown five consecutive quarters of sales growth, it’s growing from a significantly reduced base. Mattel’s fourth-quarter sales in 2025 fell short of Wall Street expectations, and the company issued a lower-than-expected profit forecast for 2026. This led to downgrades from Citi and JPMorgan, and a roughly 19% drop in Mattel’s share price since the February 10 report.
Activists investors, like Barington Capital, have even suggested streamlining Mattel’s portfolio, potentially including selling off brands like American Girl and Fisher-Price. While American Girl isn’t a huge part of Mattel’s overall financial profile, its strategic importance remains a key question for investors.
Leveraging Nostalgia and Expanding the Brand
Despite the challenges, American Girl retains a strong emotional connection with many consumers. The brand fostered generational loyalty by offering historically-rooted characters and storylines that tackled complex issues. This nostalgia is a valuable asset that Mattel is attempting to leverage.
Mattel is releasing modernized versions of its original six characters and publishing its first novel for adults, centered on Samantha Parkington. The company is also expanding into digital platforms, including YouTube, TikTok, and “American Girl World” on Roblox, to reach new audiences.
The Rise of the “Kidult” Collector
The growing “kidult” market – adults who buy toys for themselves – presents a significant opportunity. Spending on toys for adults surpassed spending on toys for young children in late 2024, driving industry growth in 2025. Mattel is exploring ways to monetize its intellectual property through publishing, collectibles, entertainment, and digital platforms.
However, Mattel must strike a balance between catering to nostalgic adults and attracting new generations of children. As Jamie Cygielman, global head of dolls for Mattel, stated, “Nostalgia is an entry point, not the endgame.”
FAQ
Q: How much does an American Girl doll typically cost?
A: A traditional 18-inch American Girl doll starts at $135, excluding accessories.
Q: Has American Girl’s sales been declining?
A: Sales peaked at over $600 million a decade ago and fell to around $200 million in 2023, but have shown five consecutive quarters of growth.
Q: What is Mattel doing to revitalize the American Girl brand?
A: Mattel is releasing modernized versions of original characters, publishing adult-focused content, and expanding into digital platforms like Roblox.
Q: Is Mattel considering selling American Girl?
A: Activist investors have suggested it, but Mattel is currently focused on stabilizing and growing the brand.
Did you recognize? American Girl dolls originally came with accompanying books that addressed historical and social issues, setting them apart from other dolls on the market.
Pro Tip: Keep an eye on American Girl’s digital presence, particularly on platforms like Roblox, for new ways to engage with the brand and its characters.
What are your favorite memories of American Girl dolls? Share your thoughts in the comments below!
