When a spring is compressed the energy changes from kinetic to potential energy as Energy cannot be destroyed but can be transformed from one form to another.
This can be best explained with the help of work. Suppose a block with certain kinetic energy comes in contact to the spring its kinetic energy changes to Potential Energy of the spring or we can say that its Kinetic Energy is converted to Potential energy as the block does work on spring.
Block compresses the spring by changing its length and it requires some work which is equal to change in its Potential Energy of spring.
