The spectre of rising inflation in 2017 casts a new pall over Britain's established grocers like WM Morrison Supermarkets(LSE: MRW), this fresh pressure on household budgets likely to drive even more shoppers into the arms of low-cost rivals.
The country's so-called Big 4 supermarkets have already, and persistently, struggled to hang onto the coat tails of Aldi and Lidl even in a low inflationary environment. Indeed, latest Kantar Worldpanel data showed sales at Morrisons down 1.4% during the 12 weeks to December 4.
By comparison, sales at the German cut-price chains surged 10% and 5.7% respectively. And this variance is likely to continue as the firms continue their ambitious expansion plans in the New Year and beyond.
With Morrisons having to keep on discounting to stop sales flatlining, and margins predicted to come under additional pressure as suppliers hike prices to mitigate sterling weakness, I reckon City predictions of a stunning long-term earnings bounce-back are built on extremely shaky foundations.
And I consequently believe that Morrisons' P/E ratios of 21.7 times and 19.8 times for the periods to January 2017 and 2018 are far too expensive. Rather, I reckon these elevated numbers could result in a hefty negative re-rating should industry data continue to disappoint.
Under the screw
DIY giant Kingfisher (LSE: KGF) is another retail colossus facing an uncertain revenues outlook in 2017.
Demand for the furnishings and DIY expert's big-ticket items are likely to come under particular pressure should, as expected, the British labour market weaken and add to the angst created by increasing inflation.
But the Screwfix and B&Q owner's UK operations aren't the only problem as it also battles increasingly-choppy waters in its other core market of France. Like-for-like sales across the Channel ducked 3.6% during August-October, Kingfisher's latest trading statement showed.
Kingfisher's P/E ratios for the outgoing year and beyond are far more appealing than those of Morrisons, and multiples of 14.6 times and 14.1 times for the periods ending January 2017 and 2018 fall below the benchmark of 15 times widely considered attractive value.
However, I reckon the prospect of ongoing turbulence for its main markets still makes the retailer a risk too far.
I believe the prospect of a sharp economic cool down from next year onwards puts the investment appeal of Lloyds(LSE: LLOY) under the cosh, too.
The Black Horse bank snapped up credit card giant MBNA this week from Bank of America for £1.9bn to give its top line a much-needed boost. Lloyds estimates that the move will boost revenues by around £650m per year, and enhances the company's share of the UK cards market from 15% to 26%.
The deal marks its first serious acquisition for almost a decade. But the scale of divestments in the wake of the 2008/09 banking crisis -- although an essential strategy at the time to repair the firm's gruesome balance sheet -- still leaves the it facing prolonged revenues stagnation, a situation worsened by the rising Brexit-related headwinds.
With Lloyds also likely to keep having to stash oodles of cash long after 2017 to cover escalating PPI bills, I reckon the bank could experience further heavy share price weakness in the months and years ahead, even in spite of an exceptionally cheap 'paper' P/E ratio of 9.7 times for next year.
Banish your Brexit fears
But the troubles over at Lloyds et al don't mean investors should run for the hills.
Our brand new Brexit: Your 5-Step Investor's Survival Guide report tells you everything you need to know about investing in a post-EU world.
We at The Motley Fool believe that the BEST thing to do in the current environment is to KEEP BUYING STOCKS. So we've produced this wealth-building report to help you avoid the mistakes many other investors are making and print spectacular returns.
Just click here to get your copy. It's completely free and can be sent straight to your inbox.
Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.