Your clothing can now be damaged in addition to armored defenses it may possess. When the armor has been defeated and its going to damage you, the weapon is given an opportunity to damage your clothing.
As damage accumulates, you'll see the battle damage show up on your clothing. At a certain point, it will start warning you that its looking like it might fall apart if you're not careful. At some point after this warning, further damage or just trying to wear the clothing will risk having it fall apart entirely.
So take your things back to your tailors. Ask them to patch your damage up. It won't look pristine, but it will hold it together better!
(Lenny needs to back to his tailor.)