As American Girl Turns 40, Mattel Navigates Bringing Dolls into New Era

As American Girl marks its 40th anniversary, Mattel grapples with digital competition and an aging customer base while trying to revive a brand whose sales have fallen to $200 million from a $600 million peak.

The flagship American Girl Place at Rockefeller Center in New York City feels frozen in time, with the scent of vanilla in the air and young girls darting between doll displays. But behind the scenes, the business of American Girl is navigating a challenging transformation as it celebrates its 40th anniversary.

Around a decade ago at its peak, American Girl was recording more than $600 million in annual sales. By 2023, that figure had fallen to roughly $200 million just a third of prior levels. While the brand has posted five consecutive quarters of sales growth, analysts caution this represents stabilization rather than a full recovery. "Growing off a base that's down more than 60% doesn't mean the brand is back. It means it's stabilizing," said Morningstar analyst Jaime Katz.

Mattel reported fourth-quarter sales of $1.77 billion, falling short of Wall Street expectations, and shares have dropped about 19% since February 10. The company faces mounting challenges: a standard 18-inch American Girl doll starts at $135, a steep price point for inflation-conscious households, while children increasingly gravitate toward iPads, Nintendo Switches, and short-form video.

To mark the anniversary, American Girl launched the Modern Era Collection, reimagining six beloved historical characters Samantha, Addy, Molly, Josefina, Felicity, and Kirsten as 14.5-inch dolls with contemporary outfits. The move sparked swift backlash from loyal fans. "Samantha isn't an iPad kid," one Instagram user commented. "Listen to your millennial followers who are now buying stuff for their daughters," another wrote.

Mattel is also targeting the growing "kidult" market adults who buy toys for themselves, whose spending now exceeds that for children ages 3 to 5. The company is releasing its first novel for adults, Samantha: The Next Chapter, featuring the 1904 character as a young woman in 1920s New York. Simultaneously, it's investing in digital platforms including YouTube, TikTok, and "American Girl World" on Roblox to engage younger generations.

"Kids are more digital in play, and the brand has struggled," Katz noted. "Nostalgia is an entry point, not the endgame," said Jamie Cygielman, Global Head of Dolls at Mattel. "The question is how we extend that emotional equity into new platforms and new audiences."