Wall Street professionals seemed to be in a good mood on Friday morning, hoping to see confirmation that inflationary pressures are easing. After having posted modest gains on Thursday, markets held on to their upward momentum, with stock futures on most major indexes climbing roughly half a percent.

Investors have been nervously watching the latest macroeconomic data in an effort to decide whether the bear market in stocks is likely to continue in 2023. In particular, some are predicting that the economy will suffer a recession in the coming year, and that could be particularly problematic for consumer stocks that rely on economic strength to drive shoppers into stores. Overnight, the latest results from Costco Wholesale (COST 1.07%) shed some light on how typical American consumers are faring. However, the bigger share-price decline came for high-end athletic apparel retailer Lululemon Athletica (LULU -2.21%), whose quarterly financial report suggested greater exposure to a sluggish consumer economy.

Costco keeps growing

Shares of Costco Wholesale were down almost 1% on Friday morning. The warehouse retail pioneer reported fiscal first-quarter financial results for the period ending Nov. 20 that fell short of some investors' expectations but still indicated continuing growth.

Costco's overall revenue for the period rose 8% year over year to $53.4 billion, with the company posting a 6.6% rise in comparable sales from the same time last year. Foreign currency impacts weighed heavily on Costco's international business, but the corresponding boost from gasoline price changes over the past year offset much of downward pressure from the strong U.S. dollar, resulting in adjusted comparable sales gains of 7.1%.

Costco's bottom line saw more modest gains. Net income for the period was $1.36 billion, which worked out to $3.07 per share. That was up just 3% from year-ago levels, reflecting some of the cost pressures that have pulled down margin levels across the retail industry.

The retailer reported that its fresh food sales were down slightly, suggesting that consumers struggling with their budgets are cutting back on higher-priced items in favor of cheaper processed foods. Yet Costco saw strength in ancillary businesses like its travel services, and it believes that year-over-year inflation rates are starting to slow, albeit slowly. That's news that could eventually lift retail stocks across the industry.

Lululemon cools off

Elsewhere, shares of Lululemon Athletica fell 7% in premarket trading. The yoga and athletic apparel retail specialist saw strong performance at the start of the holiday season, but it still fears that future results won't be as impressive as investors had wanted to see.

It's hard to find much fault with Lululemon's results for the fiscal third quarter that ended Oct. 30. Net revenue jumped 28% year over year to $1.86 billion. Comparable sales were up 22%, with direct-to-consumer driving the way higher with its 31% growth. Even in store locations, though, Lululemon had strong performance, with comparable-store sales gaining 14% from year-ago levels. Despite a slight drop in adjusted operating margin levels, adjusted earnings of $2 per share were 23% higher than in the previous year's period.

Yet investors weren't satisfied with Lululemon's guidance. The company expects fiscal fourth-quarter revenue of $2.605 billion to $2.655 billion, with earnings of $4.20 to $4.30 per share. For the full year, sales just shy of $8 billion and adjusted earnings a bit under $10 per share didn't paint quite as bright a picture as hoped.

It's not surprising to see consumers cut back on discretionary spending in an inflationary environment, but for a retailer whose stock trades at a relatively high earnings multiple, any weakness is getting an unfavorable response from shareholders. Nevertheless, Lululemon's long-term brand strength appears to be intact and should serve investors well in the long run.