The most common and most likely answer to this crossword clue is the 7 letter word SHRINKS
I've seen this crossword clue in Financial Times
S
H
R
I
N
K
S
Buddy explains!

The straight part
We know that "contracts" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case contracts = shrinks.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.
What does SHRINKS mean?
SHRINKS noun- Shrinkage; contraction; recoil.
- (sometimes derogatory) A psychiatrist or psychotherapist.
- Loss of inventory, for example due to shoplifting or not selling items before their expiration date.
- To cause to become smaller.
- To become smaller; to contract.
- To cower or flinch.
- To draw back; to withdraw.
- To withdraw or retire, as from danger.
- To move back or away, especially because of fear or disgust.