Fair Value

3 Months Ended

Apr. 30, 2024

4. Fair Value

The Company utilizes a hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach and cost approach that relate to its financial assets and financial liabilities). The levels of the hierarchy are described as follows:

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Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities.

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Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

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Level 3: Unobservable inputs that reflect the Company’s own assumptions.

Management’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of financial assets and liabilities and their placement within the fair value hierarchy. The Company’s financial assets that are accounted for at fair value on a recurring basis are presented in the tables below:


	Marketable Securities Fair Value as of
	April 30, 2024
	Level 1		Level 2		Level 3		Total
Assets:
Corporate bonds	$	—	$	263,704	$	—	$	263,704
Federal government agencies		—		129,295		—		129,295
Municipal and pre-refunded municipal bonds		—		87,823		—		87,823
US Treasury securities		—		78,064		—		78,064
Certificates of deposit		—		21,499		—		21,499
Mutual funds, held in rabbi trust		16,360		—		—		16,360
Commercial paper		—		2,991		—		2,991
	$	16,360	$	583,376	$	—	$	599,736


	Marketable Securities Fair Value as of
	January 31, 2024
	Level 1		Level 2		Level 3		Total
Assets:
Corporate bonds	$	—	$	270,539	$	—	$	270,539
Federal government agencies		—		134,413		—		134,413
Municipal and pre-refunded municipal bonds		—		86,878		—		86,878
US Treasury securities		—		61,942		—		61,942
Certificates of deposit		—		21,499		—		21,499
Mutual funds, held in rabbi trust		15,068		—		—		15,068
Commercial paper		—		10,557		—		10,557
	$	15,068	$	585,828	$	—	$	600,896


	Marketable Securities Fair Value as of
	April 30, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Corporate bonds	$	—	$	125,538	$	—	$	125,538
Federal government agencies		—		35,568		—		35,568
Municipal and pre-refunded municipal bonds		—		63,090		—		63,090
US Treasury securities		—		22,888		—		22,888
Certificates of deposit		—		249		—		249
Mutual funds, held in rabbi trust		12,726		—		—		12,726
Commercial paper		—		35,874		—		35,874
	$	12,726	$	283,207	$	—	$	295,933

Financial assets

Level 1 assets consist of financial instruments whose value has been based on inputs that use, as their basis, readily observable market data that are actively quoted and are validated through external sources, including third-party pricing services and brokers.

Level 2 assets consist of financial instruments whose value has been based on quoted prices for similar assets and liabilities in active markets as well as quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3 assets consist of financial instruments where there has been no active market. The Company held no Level 3 financial instruments as of April 30, 2024, January 31, 2024 and April 30, 2023.

The fair value of cash and cash equivalents (Level 1) approximates carrying value since cash and cash equivalents consist of short-term highly liquid investments with maturities of less than three months at the time of purchase. As of April 30, 2024, January 31, 2024 and April 30, 2023, cash and cash equivalents included cash on hand, cash in banks, money market accounts and marketable securities with maturities of less than three months at the time of purchase.

Non-financial assets

The Company’s non-financial assets, primarily consisting of property and equipment and lease-related right-of-use assets are tested for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

The fair value of property and equipment was determined using a discounted cash-flow model that utilized Level 3 inputs. The Company’s retail locations are reviewed for impairment at the retail location level, which is the lowest level at which individual cash flows can be identified. In calculating future cash flows, the Company makes estimates regarding future operating results based on its experience and knowledge of market factors in its retail locations. Right-of-use assets are tested for impairment in the same manner as property and equipment. For lease right-of-use assets, the Company determines the estimated fair value of the assets by comparing the discounted contractual rent payments to estimated market rent using an acceptable valuation methodology. During the three months ended April 30, 2024, the Company determined that certain long-lived assets at the Company's retail locations were unable to recover their carrying values and were written down to their fair values. During the three months ended April 30, 2024, the Company recorded impairment charges of $815 for one retail location, with a carrying value after impairment of $1,500 related to the right-of-use asset. Additionally, during the fourth quarter of fiscal 2024, the Company committed to a cease-use date of February 29, 2024 at one retail location for which the lease is not terminated, resulting in lease abandonment charges of $3,786 during the three months ended April 30, 2024.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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