After a quarter century, American Girl dolls are still wildly popular

This article first appeared in the Sunday Wisconsin StateJournal.

In 1986, three dolls — Kirsten, Samantha and Molly — took theirfirst bows.

They were bigger than most dolls, at 18 inches, had bodies thatlooked more like real girls than the curvaceous Barbie, and theywere dressed to reflect different periods in American history.

They came with books that spun stories of the spirit andpluckiness of girls from those eras.

That was the start of Pleasant co., a catalog business named forfounder and former teacher Pleasant Rowland with a double meaningthat spoke to what the dolls could offer to girls ages 7-12, aspleasant company to them.

Today, 25 years later, American Girl — the name officiallychanged in 2004 — is a small empire, with a wide assortment ofdolls, books, clothing and accessories, as well as movies, storesand online play, generating nearly $500 million a year revenue.

“It was always based in great experiences for girls. in theearly days, we were in print format only … and now, we are a verylarge, multi-channel marketer with print, online, retail andmagazine channels of distribution,” said chief executive officerEllen Brothers.

American Girl has lines of historic, contemporary and babydolls; books set in the past and in the present, as well as booksabout health, feelings and friendship. the company recentlyannounced plans for its 12th American Girl store, featuring abistro, doll hair salon and special activities.

American Girl is also one of the area’s top 20 employers. Of thecompany’s 2,000 employees, 600 work at its Middleton headquartersand call center or at the DeForest distribution center.

The dolls are made in China, as are most of the clothing itemsand accessories. And even though they are priced significantlyhigher than most dolls and toys, American Girl generates littlecontroversy. rather, the company draws widespread raves for itspositive messages to girls as well as upbeat projections for itsfinances.

“American Girl is viewed as a great success story in theindustry. A wholesome, high-quality brand that stands for learning,good values and cherished friendships,” toy industry analyst SeanMcGowan, of Needham & co., in new York, said in an emailinterview.

“American culture is better off for Pleasant Rowland and thecreation of American Girl,” said Deborah Mitchell, UW-MadisonSchool of Business senior lecturer in marketing. “There’s neverbeen a time in our history when there’s been a greater need forgirls to have an expanded view of who they are, where they’ve beenand what they could be.”

Bought by Mattel in 1998 for $700 million, American Girl hasremained relatively autonomous. “What we’ve gained is economy ofscale of the world’s largest toy company,” Brothers said.

Each has benefited from the other, she said. “For years now, weprint the Fisher-Price catalog, mail it for them, and take orderson the web for the Barbie collector business and one of the HotWheels lines.”

American Girl, in turn, has accessed Mattel’s expertise inresearch and entertainment while still controlling the “look andfeel” of the company, the layout of stores and the catalog content.“There are a lot of differences (between the businesses) andthey’ve been very, very respectful of that,” Brothers said.

The toy giant earns props for keeping hands off. “The smartestthing Mattel did was leave the company in Wisconsin and not move itto L.A.,” analyst McGowan said.

Some consumers may consider the $100 price tag for a doll and abook too expensive but American Girl makes no excuses.

“We’ve never shied away from that price point. it is quality, isage-appropriate and historically accurate,” Brothers said. she seesAmerican Girl’s competition as electronics such as cellphones oriPods; not other toys.

“It’s so much more than a toy. It’s emotional engagement; it’s afriend; it’s a history lesson; it’s a keepsake,” Brothers said.

That was the experience of at least two Madison teenagers.

Ruth Percival was 8 years old when she got the first Girl of theYear doll, Lindsey, and the book telling her story. “I did feellike I could relate to Lindsey because she was Jewish,” saidPercival, now 16.

Bethany Wolkoff, 16, won a My American Girl in a school rafflewhen she was in third grade. “I wanted to take my doll everywherewith me,” she said. it wasn’t dressed in the skimpy outfits foundon dolls like Barbie. “I didn’t dress in short skirts much. Maybethat’s part of the reason I liked American Girls more,” Wolkoffsaid.

But is the market still there, as the nation’s economy continuesto struggle?

“These dolls do have high collectible value and I agree thesepurchases are about in line with the costs of electronic toys. Evenin this economy, the iPhone/iPad doesn’t seem to be hurt at all,”said Edward Woo, research analyst with Wedbush Securities, in LosAngeles.

“The brand is more expensive but it’s also a very unique productand as we’ve seen with other ‘luxury’ brands, the more affluentconsumer is willing to spend more than last year,” new York analystMcGowan said.

American Girl dolls also seem to be holding their own againstcompetitors. during the holiday season last year, Toys ‘R’ Usintroduced its 18-inch Journey Girls for $29.99. Disney had itsPrincess & Me doll for $49.99 and MGA’s Best Friends Club dollssold for $32.99.

Woo said while it is hard to track their results, American Girlstill performed well with sales rising 5 percent in 2010 over theprevious year.

McGowan is forecasting $515 million in revenue this year, upfrom $487 million in 2010. he said he thinks American Girl couldspur more sales by expanding its reach.

“I think the biggest opportunity is to capitalize on risingwealth in the middle class in countries like China, Brazil, Indiaand Russia. These markets were not big enough in the past tosupport the brand (localized, of course) but in the coming years, Ithink they will be. American Girl should, in my view, launch localversions in the larger markets,” McGowan said.

“Exploring opportunities beyond the United States is definitelysomething we’ve been considering for a while,” American Girlspokeswoman Julie Parks said, in response.

In her interview earlier, Brothers said stores outside the U.S.were possible, but gave no details.

The UW’s Mitchell said American Girl represents a lot more thana financial engine. “I see not just a business success, but I see atransformative aspect of culture for women and girls in thiscountry,” she said. “It is very much about empowering girls andyoung women.

“When a poll of little girls shows Kim Kardashian is one of thetop role models, that’s just so troubling. think how much worse itwould be without American Girl,” Mitchell said.