American Girl, Inc.

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American Girl, Inc.

8400 Fairway Place
Middleton, Wisconsin 53562
U.S.A.
Telephone: (608) 836-4848
Fax: (608) 836-1999
Web site: http://www.americangirl.com

Wholly Owned Subsidiary of Mattel, Inc.
Incorporated: 1986 as Pleasant Company
Employees: 1,400
Sales: $350 million (2003 est.)
NAIC: 511120 Periodical Publishers; 454113 Mail-Order Houses

American Girl, Inc. is one of the most well respected brands in the U.S. toy and children's book industries. Headquartered in Middleton, Wisconsin, the company has as its primary focus the positive growth and well-being of girls ages three to 12. The corporate mission is simple: "to celebrate girls." When author and educator Pleasant Rowland founded the company in 1986, its only product line was historical fiction series books and high quality, 18-inch dolls representing each of the three heroines in the series books. The company has since expanded to include additional doll and character toy lines, contemporary clothing for girls, two large retail stores, and a publishing business that ranks among the top 15 children's book publishers in the country. American Girl publishes a bimonthly magazine, as well as an expansive collection of historical fiction, and contemporary fiction and nonfiction titles. Since 1998, the company has been a wholly owned subsidiary of Mattel, Inc.

American Girl is made up of four divisions: the Consumer Catalogue and E-commerce division; the Publications division; the Retail division; and the American Girl's Brand division. Most American Girl products are marketed exclusively through the American Girls catalogue, web site, and two proprietary retail stores. American Girl-published books are also distributed through several bookstores around the country. In addition to the Wisconsin headquarters, the company has warehouse and distribution sites in Wilmot and DeForest, Wisconsin, and Edison, New Jersey, as well as retail stores in Chicago and New York City.

Bringing History to Life: 1985

A trip to Colonial Williamsburg inspired Pleasant Rowland to create the American Girls Collection of books and dolls. At the time, Rowland, a former teacher and publisher of educational books, had been looking for just the right gifts for her young nieces, but she was disenchanted with what Barbie and the Cabbage Patch dolls had to offer young girls. With her American Girl concept, she sought to combine important history lessons with play to foster a child's developing creativity.

Her vision of something that would integrate play and learning, while emphasizing traditional American values materialized as the stories of three nine-year-old heroines living out their own adventures at pivotal times in American history. Though the books were fiction, with six stories in each series, each was thoughtfully written to be historically accurate and cover key events that were crucial in shaping the United States. Rowland created the American Girl Collection in 1985 with three unique and adventurous heroines. Those first heroines were Kirsten, a Swedish immigrant girl who lived in Minnesota in the 1850s; Molly, a girl living in Chicago during the 1940s with a father serving in World War II; and Samantha, an orphan girl who lived with her wealthy grandmother in New York City in 1904.

Rowland said her goal was to "bring history to life." When she first floated the idea for historical dolls with accompanying stories past a focus group of mothers, Rowland did not get an encouraging response. However, as soon as she displayed the prototype dolls, books, and accessories, the mothers were on board. Each doll came with one introductory novel about her life and the time in history, and five additional books each telling a tale of her adventures, challenges, and resulting growth.

Parents appeared willing to buy into Pleasant Company's products despite the nearly $100 price tag for a doll and her six books. Rowland believed her products were not only high quality, but were at the time one of the few things in a "tween" girl's world telling her not to grow up too fast, but rather encouraging her to remain a little girl. The company founder's hope was to prolong that fleeting period of childhood when girls play with dolls.

Sales Soar for "Wholesome Americana"

Early indicators made Rowland's American Girl Collection look like a winner. That first Christmas season, Pleasant Company sold $1.7 million worth of products through its mail-order catalogue. During the company's second year, sales reached $7.6 million. Pleasant Company soon outgrew its warehouse and had to find a bigger space. A Time magazine article later theorized about the company's success: "The genius behind American Girl's high-end products is that moms feel good about dropping a lot of cash on low-tech, wholesome Americana."

By 1991 sales had grown to $77 million based only on a direct mail catalog and word of mouth; the "buzz" factor among mothers was not insignificant. For the next five years sales grew approximately $50 million each year. The American Girl Collection eventually expanded to include Felicity, living in Colonial Williamsburg, Virginia, in 1774; Addy, a slave girl seeking freedom in the midst of the Civil War in the 1860s; Josefina, a Hispanic girl in colonial New Mexico in 1824; Kaya, a Nez Perce girl growing up in the Northwest in 1764; and Kit, a poor girl growing up in Depression Era 1934.

In 1992 Pleasant Company's publishing arm launched a bimonthly magazine called American Girl. According to company literature it was created to be an "age-appropriate, advertising-free publication designed to affirm self esteem, celebrate achievements, and foster creativity in today's girls." The magazine content included fiction and nonfiction articles, letters from readers, party and craft ideas, advice, and even a historical or modern-day paper doll in each issue. The magazines were sold through both subscription and bookstores.

As a relatively young company, Pleasant Company's soaring sales were noticed in the marketing world. In 1993 Pleasant Company was listed among Advertising Age 's Marketing 100, the " 'best and brightest' marketers in America." The company's early success was impressive, especially given its limited distribution channels. Rowland and her vision were credited with much of the company's success. Working Woman put Rowland on its list of the top 50 women business owners for six years in a row, from 1993 through 1998.

Expanding the Brand to Contemporary Dolls and Books

In 1995 Pleasant Company branched out from its original historical product focus and debuted the "American Girls of Today" line, featuring 18-inch dolls which resembled the historical heroines in size and quality, but looked more like modern girls. Girls could order the Girls of Today dolls with specific eye, hair, skin tone, and facial features so they could own a doll that looked most like them. With all the feature combinations, there were 21 dolls to choose from. Along with the Girls of Today dolls came a host of contemporary clothes and accessories. Books about contemporary girls were also added to the line, along with "history mysteries." These new dolls, their accouterments, and modern-day books reflected the diverse interests and lifestyles of girls at the dawn of the 21st century.

That year Pleasant Company also introduced the American Girl library, a collection of nonfiction advice and activity books with such titles as A Smart Girl's Guide to Starting Middle School and the Slumber Party Book. The American Girl library line grew out of favorite sections of the magazine, which had by that time become extremely popular with girls in the eight- to 12-year-old bracket and had increased subscription sales each year.

The company also introduced the Bitty Baby line of dolls targeted toward younger girls, ages three to six, and designed to encourage nurturing behavior. Bitty Babies were high quality, huggable, 15-inch baby dolls, that had their own coordinating clothes and accessories. Bitty Babies could be ordered with a variety of combinations of skin tones and hair and eye colors, and were priced lower than the 18-inch dolls, at about $40 apiece.

Throughout the 1990s, Pleasant Company's business boomed, capturing the attention of the corporate world, even those outside the toy industry. A 1995 article in the Economist described the American Girl heroines as "gutsy, spirited and articulate, taking life's challenges in their stride. None faces tougher challenges than Addy, a slave (possibly the best-dressed slave in history), who makes a perilous escape to freedom during the civil war." The Economist continued, "The company has sold more than 25 million books and 2 million dolls since 1986. In 1994, sales increased by 40% to $152 million. To meet demand during the holiday season, the workforce has swelled from 475 to some 2,000." The Economist article also noted that, ironically, American Girl dolls were produced in Germany and many of their accessories were made in other countries.

Going Retail with a Proprietary Store

In 1998, the company opened American Girl Place, a 35,000-square-foot retail store and entertainment venue which featured a "whimsical" café and a 150-seat theater. The store, which showcased the product lines from the company's extensive catalogue, was located in Chicago's hottest shopping area on Michigan Avenue, right across from the historic Water Tower. The store was part doll boutique, part museum with life-sized dioramas of the historical dolls in their settings. The theater performance was a one-hour musical revue which highlighted the historical heroines featured in the book and doll collection. Early on, it appeared that Pleasant Company's first foray into the retail store business was successful. Within a few months the store was selling out the theater performances, and dinner reservations were booked full. In 1999 American Girl Place was awarded a "THEA," the Outstanding Achievement Award from the Themed Entertainment Association.

Company Perspectives:

"We give girls chocolate cake with vitamins. Our books are exciting, our magazine is fun, and the dolls and accessories are pretty. But more important, they give young girls a sense of self and an understanding of where they came from and who they are today."

—Pleasant T. Rowland, founder

The opening of American Girl Place had fulfilled much of Pleasant Rowland's original vision for her company, and she was ready to move on to new challenges. That same year, 1998, she sold the company named for her to Mattel, Inc, the world's leading toymaker and owner of the Barbie dynasty. Mattel paid an estimated $700 million for Pleasant Company, and has since operated it as an independent subsidiary. Rowland became vice-chairman of Mattel, but retired in 2000 to pursue new challenges. Mattel maintained Rowland's commitment to quality and limited avenues of distribution of American Girl products.

In 1999 the company gained publishing and merchandising rights to popular picture book character Angelina Ballerina from HIT Entertainment PLC. Angelina was a beloved mouse character. Pleasant Company created Angelina dolls with books and accessories. According to the company, picture books about Angelina were designed to "teach girls ages 3–7 gentle life lessons about growing up."

Testing the European Market

Pleasant Company established an office in London in 2000, and the publications arm of the business prepared to enter the European market. In 2001 the company marketed books from the American Girl historical collection, Amelia's journal-style books, and Angelina Ballerina books in the United Kingdom, with plans to pursue the French and German markets in subsequent years. Early on, it appeared "the more universal characters of Amelia and Angelina Ballerina were generating more interest than Pleasant Co.'s signature line," according to the Book Publishing Report.

The company continued to extend its American Girl brand with new lines. In 2001 they introduced heroine character dolls with a modern-day twist. Lindsey was the first in a line of limited-edition, modern-day character dolls. Lindsey came with her own story and of course clothes and accessories to match. Lindsey was a success, followed by Kailey and Marisol. The company also presented a new line of school-themed easy reader books with accompanying 16-inch posable dolls called the Hopscotch Hill School Collection. For real girls, not the doll variety, the company created American Girls Gear, or A.G. Gear, a clothing and accessory line for girls eight to 12, with apparel styles that matched both the modern and historical dolls.

Pleasant Company made business page headlines when Fortune Small Business reported that American Girl dolls were second only to Barbie as the most popular dolls in the country. In 2002 annual revenues for Pleasant Company reached $350 million, with sales coming exclusively through limited channels: the corporate web site, catalogue, and retail store. By 2003, American Girl Place was the top grossing retail site on Chicago's renowned Magnificent Mile, bringing in $40 million annually. Following the tremendous success of the Chicago retail store, Pleasant Company opened a second proprietary store in midtown Manhattan in 2003. The second American Girl Place was located across from Rockefeller Center.

Name Change, Ensuring Brand Consistency

In early 2004 Pleasant Company made a move to better highlight its well recognized brand by officially changing the company name to American Girl, Inc. It had been a gradual progression over the years. The catalogue name had changed to American Girl in 1998, the web site address was americangirl.com, and even the company phones were answered "American Girl." The company indicated that the name change would ensure better consistency of its identity with the public.

Statistics supported the company success story. More than 100 million American Girl books and ten million American Girl Dolls had been sold since Rowland first told the adventures of Kirsten in 1986. The americangirl.com web site logged 1.3 million visitors each month. American Girl Place in Chicago, in addition to grossing $40 million annually, welcomed more than a million visitors each year, making it Chicago's second most popular tourist attraction. By 2005, circulation of the American Girl magazine had reached 700,000. The magazine was ranked eighth among the top children's magazines and was the largest dedicated exclusively to girls in the seven to 12 age bracket. The editors received about 10,000 pieces of reader mail from subscribers after each issue. Perhaps most notable, according to company statistics, "over 95 percent of girls ages 7–12 are familiar with the American Girl dolls, which rank second only to Barbie in the dolls category." Newsweek said it best in 2003: "Barbie may be bigger. But the honor of best-loved doll goes to the American Girl, a flat-chested, makeup-free toy that comes packaged with an educational book."

Success Supporting Parent Company

Parent company Mattel was thrilled with the success of its 1998 acquisition. In fact, while sales of Barbie began to decline, Mattel leaders were pleased that American Girl sales remained strong, helping to boost the parent company's profit numbers. The New York and Chicago stores combined saw three million visitors in 2004. Mattel indicated that the New York store opening helped boost American Girl sales 18 percent. In addition, it was reported that Mattel was adding a story-based Barbie line, perhaps using the American Girl model.

Key Dates:

1985:: Pleasant Rowland creates the American Girl Collection.
1986:: Rowland establishes Pleasant Company.
1992:: Pleasant Company launches bimonthly American Girl magazine.
1993:: Pleasant Company is recognized in Advertising Age magazine's Marketing 100.
1995:: American Girls of Today line debuts.
1998:: American Girl Place opens in Chicago; Pleasant Company is acquired by Mattel, Inc.
2000:: Company enters the European market.
2001:: Limited edition dolls are introduced.
2003:: American Girl Place opens in midtown Manhattan.
2004:: Pleasant Company officially changes its name to American Girl, Inc.; first television movie featuring an American Girl airs.

Though American Girl had extended its brand well beyond the original historical concept, its flagship eight-character historical collection remained an integral part of the business, commanding a third of the total space in the catalogue. In late 2004, American Girl entered the media market with its first ever television movie aired on the WB network, featuring one of its most well-loved historical dolls, Samantha. The company was exploring additional movie opportunities for its other popular heroines.