American Girlseen weathering economic,recall woes

Chicago — As American Girl opens its fourth retail store this weekend in Atlanta, industry watchers say the doll is likely to sell well this season despite concerns over economic sluggishness and toy recalls.

American Girl dolls, like other premium toys, should weather an economic slowdown more effectively than mass market products, toy industry analyst Chris Byrne said.

Luxury goods typically outperform commodity products in times of economic stress, Byrne said. American Girl is a high-end product, so the margin pressure is not the same as for a mass-market toy, he said.

Toy makers might have reason to worry, considering the recent Mattel Inc. recalls of Chinese-made toys found to contain lead paint or small magnets occurring with the holiday shopping season just around the corner.

In fact, about 15% of US parents begin looking for toys for Christmas over Labor Day weekend, according to Britt Beemer of America’s Research Group.

American Girl dolls, which have been described by some as "the anti-Barbie," resemble girls between the ages of 6 and 10. They are priced at about $90 each.

With the opening of its Atlanta store in a shopping mall in the affluent suburb of Alpharetta, American Girl is continuing to try to create an upscale shopping experience surrounding its product.

The company has invested heavily in its New York, Chicago and Los Angeles locations, where its stores feature a dining room, theater, photo studio and doll hair salon. The Atlanta store does not have a theater or picture studio.

"(The doll) is expensive initially, but there’s something about being at the store," said Julie Ciardiello of South Riding, Virginia, shopping at the Chicago store. "It’s not like another store, where you stop in for a few minutes."

"More than 13 million dolls have been sold through the company’s catalogue, retail stores and Web site since the company began, with more than 19 million store visitors. An American Girl boutique and bistro is scheduled to open in Dallas in November.

Straight to the store

Lisa Bingham flew from Kentucky to Chicago with her daughter, Anna Katherine, just to visit the American Girl Store.

"We landed and came straight to the store from the airport," Ms. Bingham said.

Despite packed stores like the ones just off of Chicago’s Michigan Ave., sales of American Girl products fell 10% to $55.8 million in the second quarter.

"That quarter, which ended in June, is not considered a bellwether of performance, however, because the majority of toy sales come at the end of the year. In last year’s fourth quarter, American Girl sales rose 2% to $245.2 million.

"As with other purchases, consumers are concerned about getting the most for their money when they buy toys.

"The consumer will spend $200 if they see tremendous value," said Jim Silver, editor in chief of Toy Wishes magazine. On the other hand, he said, "They won’t spend $20 if they don’t see value."

He cited blockbuster items such as 2006’s Butterscotch, Hasbro, Inc.’s nearly $300 animatronic pony that whinnies, swishes her tail and bounces. The toy "blew out last year. You couldn’t get it," Mr. Silver said.

Other hot sellers included Banzai Falls, the giant motor-powered water slide from Toy Quest that sells for anywhere from $200 to $500. For that price, Mr. Silver said, "it’s cheaper than going to a water park."

Toy analyst Mr. Byrne, described the American Girl experience as one of the few intergenerational experiences women can participate in.

"Men have sports, but what do women have?" he said.

At American Girl stores, moms, grandmothers and daughters can have lunch, dinner or tea, see a revue and have their doll’s hair styled.

The company, founded as Pleasant Co. in 1986, was acquired by El Segundo, California-based Mattel in 1998. American Girl is run separately out of Middleton, Wisconsin. Mr. Byrne said that because American Girl is perceived as separate from Mattel, it is largely insulated from fallout from the recalls. The Mattel name does not appear on American Girl packaging.

But, like most other toys sold in the United States, "American Girl" is made in China.

"I don’t really like the idea-it’s kind of contradictory," said Kathy Weihe of Lafayette, Indiana, a mother shopping at the American Girl store in Chicago. "At the same time, it’s about what your child wants. It’s hard to say ’No, you can’t have this.’"

Concerns about product origin don’t appear to be deterring shoppers. "It’s kind of ironic," said Ann Chaffee of Bath, Michigan, as she shopped at the American Girl store in Chicago. "Will it stop me from buying? No."


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American Girlseen weathering economic,recall woes