William-Sonoma dominated the fragmented home furnishings category, and when housing came back after the great recession, the stock roared back with it. It seemed to Cramer that it was one of the few retailers that got the Internet right, with 50 percent of its sales coming from various e-commerce platforms. It also had a strong presence overseas, with success in the United Kingdom and Australia.
"If you would ask me to pick out a best-of-breed retailer a year ago, Williams-Sonoma would have been near the top of the list. Now it wouldn't even make the list," Cramer said.
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What the heck happened?
The wheels started to come off on this stock on Aug. 26, when Williams-Sonoma reported a decent quarter, but with sales and earnings forecasts well below what analysts were expecting. The stock plunged almost 9 percent in the next two trading days.
The stock also took a hit when Williams-Sonoma reported again in mid-November and same-store sales came in lighter than expected. At that point, many analysts began to give up on the name.
One of the key points that analysts made was that large online home goods vendor Wayfair carried similar products that were far less expensive.
For those investors who believe that the Fed will continue to raise interest rates in the near future, that means mortgage rates will rise and put pressure on housing. That pressure tends to hurt companies like Williams-Sonoma.
"I worry about housing after that weak new homes figure we got this morning, despite what Home Depot said yesterday, and I worry very specifically about Williams-Sonoma," Cramer said.
In particular, Cramer's worries stem from the fact that Williams-Sonoma is a mall-based retailer and traffic to shopping malls has been declining.
"I'm not quite ready to say the mall is dead, but it is certainly on life support," Cramer said. (Tweet This)
While it is possible for the stock to come roaring back, Cramer suggested for investors to say away from it until the company reports earnings again on March 16. If the results are strong —then he will change his opinion.
But for those investors looking for a retail play on housing, he said to stick with best-of-breed retailer Home Depot.
"Avoid Williams-Sonoma until it becomes clear that management has a plan to reignite their business," Cramer said.