Returned lots of cotton — it’s shrinking (5)
I believe the answer is:
timid
'shrinking' is the definition.
(I've seen this in another clue)
'returned lots of cotton' is the wordplay.
'returned' says the letters should be written backwards.
'lots of' means to remove the last letter (most but not all of the letters).
'cotton' becomes 'dimity' (type of cotton).
'dimity' with its last letter taken away is 'dimit'.
'dimit' reversed gives 'TIMID'.
'it's' acts as a link.
(Other definitions for timid that I've seen before include "Apprehensive and unassertive" , "Nervous and easily alarmed" , "Diffident, faint-hearted" , "Lacking self-confidence" , "Fearful - shy" .)