Crushed fabric (7)
I believe the answer is:
worsted
I believe this clue is a double definition.
'crushed' is the first definition.
(worsting is a kind of crushing)
'fabric' is the second definition.
(worsted is a kind of fabric)
(Other definitions for worsted that I've seen before include "material" , "stuff" , "Stuffed" , "Wiped the floor with" , "taken to the cleaners" .)