woolen fabric made from twisted yarn, late 13c., from Worstead (Old English Wurðestede), town in Norfolk where the cloth originally was made.
Old English wyrresta, from Proto-Germanic *wers-ista- (cf. Old Saxon wirsista, Old Norse verstr, Old Frisian wersta, Old High German wirsisto), superlative of PIE *wers- "to confuse, mix up" (see worse). Phrase in the worst way (1839) is from American English sense of "most severely."
"damage, inflict loss upon," c.1600, from worst (adj.). Related: Worsted; worsting.