FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

(Mark  One)

[X]     QUARTERLY  REPORT  PURSUANT  TO  SECTION  13  OR  15(D)  OF  THE
     SECURITIES  EXCHANGE  ACT  OF  1934

For  the  quarterly  period  ended  March  31,  2003

or

[  ]     TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15(D)  OF  THE
     SECURITIES  EXCHANGE  ACT  OF  1934

For  the  transition  period  from      to

Commission  File  Number  1-12368

                            THE LEATHER FACTORY, INC.
             (Exact name of registrant as specified in its charter)

             DELAWARE                                          75-2543540
 (State  or  other  jurisdiction  of                       (I.R.S.   Employer
 Incorporation  or  organization)                        Identification  Number)

                3847 EAST LOOP 820 SOUTH, FT. WORTH, TEXAS  76119
               (Address of principal executive offices) (Zip code)

                                 (817) 496-4414
              (Registrant's telephone number, including area code)

     Indicate  by  check  mark  whether the registrant (1) has filed all reports
required  to  by  filed by Section 13 or 15(d) of the Securities Exchange Act of
1934  during  the  preceding  12  months  (or  for  such shorter period that the
registrant  was required to file such reports), and (2) has been subject to such
filing  requirements  for  the  past  90  days.

                                  Yes   X    No

      Indicate  the number of shares outstanding of each of the issuer's classes
of  common  stock,  as  of  the  latest  practicable  date.

                                                           Shares outstanding as
             Class                                             Of May 12, 2003
------------------------------                             ---------------------
Common Stock, par value $.0024 per share                         10,212,461


                                        1
<PAGE>

                            THE LEATHER FACTORY, INC.

                                    FORM 10-Q

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003


                                TABLE OF CONTENTS
                                -----------------


                                                                       PAGE NO.
                                                                       --------

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

Consolidated Balance Sheets
March 31, 2003 and December 31, 2002                                       3

Consolidated Statements of Operations
Three months ended March 31, 2003 and 2002                                 4

Consolidated Statements of Cash Flows
Three months ended March 31, 2003 and 2002                                 5

Consolidated Statements of Stockholders' Equity
Three months ended March 31, 2002 and 2002                                 6

Notes to Consolidated Financial Statements                                 7

Item 2.  Management's Discussion and Analysis of Financial
Condition and Results of Operations                                       12

Item 3.  Quantitative and Qualitative Disclosures About Market Risk       17

Item 4.  Controls and Procedures                                          18

PART II.  OTHER INFORMATION

Item 2.  Changes in Securities                                            18

Item 6.  Exhibits and Reports on Form 8-K                                 18


SIGNATURES                                                                19


                                        2
<PAGE>

                            THE LEATHER FACTORY, INC.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>



                                                                                   March 31,     December 31,
                                                                                      2003           2002
                                                                                 -----------    -------------
<S>                                                                               <C>           <C>
                                                                                 (unaudited)
ASSETS
CURRENT ASSETS:
  Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $   104,988   $     101,557
  Cash restricted for payment on revolving credit facility . . . . . . . . . . .      463,653         553,839
  Accounts receivable-trade, net of allowance for doubtful accounts
      of $45,000 and $78,000 in 2003 and 2002, respectively. . . . . . . . . . .    2,767,801       1,938,698
  Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   12,672,585      12,695,344
  Prepaid income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            -          55,644
  Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . .      155,017         159,090
  Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    1,024,155         672,117
                                                                                  ------------  --------------
    Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .   17,188,199      16,176,289
                                                                                  ------------  --------------

PROPERTY AND EQUIPMENT, at cost. . . . . . . . . . . . . . . . . . . . . . . . .    5,285,532       5,321,749
  Less-accumulated depreciation and amortization . . . . . . . . . . . . . . . .   (3,305,396)     (3,301,898)
                                                                                  ------------  --------------
    Property and equipment, net. . . . . . . . . . . . . . . . . . . . . . . . .    1,980,136       2,019,851
                                                                                  ------------  --------------

GOODWILL, net of accumulated amortization of $734,000
  in 2003 and 2002, respectively . . . . . . . . . . . . . . . . . . . . . . . .      692,292         686,484
OTHER INTANGIBLES, net of accumulated amortization of
  $126,000 and $113,000, in 2003 and 2002, respectively. . . . . . . . . . . . .      470,768         483,507
OTHER assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      326,667         309,471
                                                                                  ------------  --------------
                                                                                  $20,658,062   $  19,675,602
                                                                                  ============  ==============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 1,504,365   $   1,594,909
  Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . .      995,939       2,503,331
  Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      131,743               -
  Notes payable and current maturities of long-term debt . . . . . . . . . . . .    5,816,689       4,218,968
                                                                                  ------------  --------------
    Total current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . .    8,448,736       8,317,208
                                                                                  ------------  --------------

DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      206,481         186,076

NOTES PAYABLE AND LONG-TERM DEBT, net of current maturities. . . . . . . . . . .            -           2,256

COMMITMENTS AND CONTINGENCIES. . . . . . . . . . . . . . . . . . . . . . . . . .            -               -

STOCKHOLDERS' EQUITY:
  Preferred stock, $0.10 par value; 20,000,000 shares authorized,
      none issued or outstanding . . . . . . . . . . . . . . . . . . . . . . . .            -               -
  Common stock, $0.0024 par value; 25,000,000 shares authorized, 10,212,461 and
      10,149,961 shares issued and outstanding at 2001 and 2002, respectively. .       24,510          24,360
  Paid-in capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    4,211,407       4,163,901
  Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    7,838,863       7,064,345
  Less: Notes receivable - secured by common stock . . . . . . . . . . . . . . .      (44,003)        (44,003)
  Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . .      (27,932)        (38,541)
                                                                                  ------------  --------------
    Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . .   12,002,845      11,170,062
                                                                                  ------------  --------------
                                                                                  $20,658,062   $  19,675,602
                                                                                  ============  ==============
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                        3
<PAGE>

                            THE LEATHER FACTORY, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                   THREE MONTHS ENDED MARCH 31, 2003 AND 2002

<TABLE>
<CAPTION>

                                                                          2003          2002
                                                                      ------------  ------------
<S>                                                                   <C>           <C>
NET SALES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $10,560,085   $10,203,951

COST OF SALES. . . . . . . . . . . . . . . . . . . . . . . . . . . .    4,914,581     4,835,356
                                                                      ------------  ------------
    Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . .    5,645,504     5,368,595

OPERATING EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . .    4,529,832     4,175,136
                                                                      ------------  ------------
INCOME FROM OPERATIONS . . . . . . . . . . . . . . . . . . . . . . .    1,115,672     1,193,459

OTHER EXPENSE:
  Interest expense . . . . . . . . . . . . . . . . . . . . . . . . .       63,352        89,869
  Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (30,818)       16,355
                                                                      ------------  ------------
    Total other expense. . . . . . . . . . . . . . . . . . . . . . .       32,534       106,224
                                                                      ------------  ------------
INCOME BEFORE INCOME TAXES and CUMULATIVE EFFECT OF CHANGE
  IN ACCOUNTING PRINCIPLE. . . . . . . . . . . . . . . . . . . . . .    1,083,138     1,087,235

PROVISION FOR INCOME TAXES . . . . . . . . . . . . . . . . . . . . .      308,620       327,930
                                                                      ------------  ------------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
   ACCOUNTING PRINCIPLE. . . . . . . . . . . . . . . . . . . . . . .      774,518       759,305

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE,
  NET OF INCOME TAXES. . . . . . . . . . . . . . . . . . . . . . . .            -    (4,008,831)
                                                                      ------------  ------------
NET INCOME (LOSS). . . . . . . . . . . . . . . . . . . . . . . . . .  $   774,518   $(3,249,526)
                                                                      ============  ============
NET INCOME PER COMMON SHARE - BASIC:
  INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE.  $      0.08   $      0.08
  CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, NET . . . . .            -         (0.40)
                                                                      ------------  ------------
  NET INCOME PER COMMON SHARE. . . . . . . . . . . . . . . . . . . .  $      0.08   $     (0.32)
                                                                      ============  ============

NET INCOME PER COMMON SHARE - ASSUMING DILUTION:
  INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE.  $      0.07   $      0.07
  CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, NET . . . . .            -         (0.37)
                                                                      ------------  ------------
  NET INCOME PER COMMON SHARE - DILUTED. . . . . . . . . . . . . . .  $      0.07   $     (0.30)
                                                                      ============  ============

  WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
    Basic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   10,177,433    10,001,717
    Diluted. . . . . . . . . . . . . . . . . . . . . . . . . . . . .   10,793,464    10,731,713
</TABLE>

   The accompanying notes are an integral part of these financial statements.
                                        4
<PAGE>


                            THE LEATHER FACTORY, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                   THREE MONTHS ENDED MARCH 31, 2003 AND 2002

<TABLE>
<CAPTION>

<S>                                                                      <C>           <C>
                                                                             2003          2002
                                                                         -----------   ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . .  $   774,518   $(3,249,526)
  Adjustments to reconcile net income (loss) to net
   cash provided by operating activities-
     Depreciation & amortization. . . . . . . . . . . . . . . . . . . .      125,031       122,993
     Loss on disposal of assets . . . . . . . . . . . . . . . . . . . .        9,371             -
     Amortization of deferred financing costs . . . . . . . . . . . . .            -        37,038
     Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . .       24,479       (36,290)
     Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       10,609        (3,340)
     Cumulative effect of change in accounting principle. . . . . . . .            -     4,008,831
     Net changes in assets and liabilities:
       Accounts receivable-trade, net . . . . . . . . . . . . . . . . .     (829,103)     (444,920)
       Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . .       22,759       878,308
       Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . .      187,386       334,734
       Other current assets . . . . . . . . . . . . . . . . . . . . . .     (352,038)     (465,286)
       Accounts payable . . . . . . . . . . . . . . . . . . . . . . . .      (90,543)      244,169
       Accrued expenses and other liabilities . . . . . . . . . . . . .   (1,507,392)      (54,597)
                                                                         ------------  ------------
     Total adjustments. . . . . . . . . . . . . . . . . . . . . . . . .   (2,399,441)    4,621,640
                                                                         ------------  ------------
      Net cash provided by (used in) operating activities . . . . . . .   (1,624,923)    1,372,114
                                                                         ------------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment. . . . . . . . . . . . . . . . . .      (93,972)      (97,622)
  Payments in connection with businesses acquired . . . . . . . . . . .            -      (227,747)
  Proceeds from sale of assets. . . . . . . . . . . . . . . . . . . . .        6,217             -
  Increase in other assets. . . . . . . . . . . . . . . . . . . . . . .      (17,197)         (421)
                                                                         ------------  ------------
      Net cash used in investing activities . . . . . . . . . . . . . .     (104,952)     (325,790)
                                                                         ------------  ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net increase (decrease) in revolving credit loans . . . . . . . . . .    1,597,065    (1,521,777)
  Payments on notes payable and long-term debt. . . . . . . . . . . . .       (1,600)      (19,643)
  Decrease in cash restricted for payment on revolving credit facility.       90,186       145,648
  Payments received on notes secured by common stock. . . . . . . . . .            -        20,736
  Proceeds from issuance of common stock. . . . . . . . . . . . . . . .       47,655        13,125
                                                                         ------------  ------------
      Net cash provided by (used in) financing activities . . . . . . .    1,733,306    (1,361,911)
                                                                         ------------  ------------

NET CHANGE IN CASH. . . . . . . . . . . . . . . . . . . . . . . . . . .        3,431      (315,587)

CASH, beginning of period . . . . . . . . . . . . . . . . . . . . . . .      101,557       409,040
                                                                         ------------  ------------
CASH, end of period . . . . . . . . . . . . . . . . . . . . . . . . . .  $   104,988   $    93,453
                                                                         ============  ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Interest paid during the period . . . . . . . . . . . . . . . . . . .  $    56,930   $    59,283
  Income taxes paid during the period, net of (refunds) . . . . . . . .       41,620        25,172
</TABLE>

   The accompanying notes are an integral part of these financial statements.
                                        5
<PAGE>


                            THE LEATHER FACTORY, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                   (UNAUDITED)
                   THREE MONTHS ENDED MARCH 31, 2003 AND 2002

<TABLE>
<CAPTION>

                                                                            Common Stock
                                                                  ---------------------------------
                                                                      Number             Par              Paid-in
                                                                    of shares           value             capital
                                                                  --------------  ------------------ ------------------
<S>                                                               <C>             <C>                <C>
BALANCE, December 31, 2001 . . . . . . . . . . . . . . . . . . .      9,991,161   $          23,979  $        4,030,508

  Payments on notes receivable -
       secured by common stock . . . . . . . . . . . . . . . . .              -                   -                   -

  Shares issued - employee
       stock options exercised . . . . . . . . . . . . . . . . .         20,000                  48              13,077

  Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . .              -                   -                   -

  Translation adjustment . . . . . . . . . . . . . . . . . . . .              -                   -                   -
                                                                  --------------  ------------------ ------------------
BALANCE, March 31, 2002. . . . . . . . . . . . . . . . . . . . .     10,011,161   $          24,027  $        4,043,585
                                                                  ==============  ================== ==================

BALANCE, December 31, 2002 . . . . . . . . . . . . . . . . . . .     10,149,961   $          24,360  $        4,163,901

  Shares issued - employee
       stock options exercised . . . . . . . . . . . . . . . . .         62,500                 150              47,506

  Net income . . . . . . . . . . . . . . . . . . . . . . . . . .              -                   -                   -

  Translation adjustment . . . . . . . . . . . . . . . . . . . .              -                   -                   -
                                                                  --------------  ------------------ ------------------
BALANCE, March 31, 2003. . . . . . . . . . . . . . . . . . . . .     10,212,461   $          24,510  $        4,211,407
                                                                  ==============  ================== ==================

                                                              Notes       Accumulated
                                                           receivable        Other
                                             Retained     - secured by    Cumulative                    Comprehensive
                                             earnings     common stock       Loss           Total       Income (Loss)
                                           ------------  --------------  ------------  ---------------  -------------
<S>                                        <C>           <C>             <C>           <C>              <C>
BALANCE, December 31, 2001 . . . . . . . . $ 8,478,187   $     (71,939)  $   (37,064)  $   12,423,671

  Payments on notes receivable -
       secured by common stock . . . . . .           -          20,736             -           20,736

  Shares issued - employee
       stock options exercised . . . . . . .         -               -             -           13,125

  Net loss . . . . . . . . . . . . . . . . .(3,249,526)              -             -       (3,249,526)   $(3,249,526)

  Translation adjustment . . . . . . . . . .         -               -        (3,340)          (3,340)        (3,340)
                                           ------------  --------------  ------------  ---------------    -----------
BALANCE, March 31, 2002. . . . . . . . . ..$ 5,228,661   $     (51,203)  $   (40,404)  $    9,204,666
                                           ============  ==============  ============  ===============
  Comprehensive loss for the three months ended March 31, 2002                                           $(3,252,866)
                                                                                                         ============

BALANCE, December 31, 2002 . . . . . . . .$ 7,064,345    $     (44,003)  $   (38,541)  $   11,170,062

  Shares issued - employee
       stock options exercised . . . . . .          -                -             -           47,656

  Net income . . . . . . . . . . . . . . .    774,518                -             -          774,518    $   774,518

  Translation adjustment . . . . . .   .            -                -        10,609           10,609         10,609
                                           ------------  --------------  ------------  ---------------    -----------
BALANCE, March 31, 2003.   . . . . . . .  $ 7,838,863    $     (44,003)  $   (27,932)  $   12,002,845
                                           ============  ==============  ============  ===============
  Comprehensive income for the three months ended March 31, 2003                                         $   785,127
                                                                                                         ============
</TABLE>

   The accompanying notes are an integral part of these financial statements.
                                        6
<PAGE>

                            THE LEATHER FACTORY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1.  BASIS  OF  PRESENTATION  AND  CERTAIN  SIGNIFICANT  ACCOUNTING  POLICIES

In the opinion of management, the accompanying consolidated financial statements
for  The Leather Factory, Inc. and its consolidated subsidiaries ("TLF") contain
all  adjustments  necessary to present fairly its financial position as of March
31, 2003 and December 31, 2002, and its results of operations and cash flows for
the  three-month  periods  ended  March  31,  2003  and  2002.  Certain
reclassifications  have  been  made to prior year amounts in order to conform to
the  current  year  presentation.  Operating  results for the three-month period
ended  March  31, 2003 are not necessarily indicative of the results that may be
expected  for  the  year  ended December 31, 2003.  These consolidated financial
statements should be read in conjunction with the audited consolidated financial
and  accompanying  notes included in our Annual Report on Form 10-K for the year
ended  December  31,  2002.

The preparation of financial statements in accordance with accounting principles
generally  accepted  in  the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying  notes.  Actual  results  could  differ  from  those  estimates.

Recent  Accounting  Pronouncements

In  December  2002,  the  Financial  Accounting  Standards Board ("FASB") issued
Statement  of  Financial  Accounting  Standards ("SFAS") No. 148, Accounting for
Stock-Based  Compensation  -  Transition  and  Disclosure - an amendment of FASB
Statement  123,  ("SFAS  148").  SFAS  148  amends  SFAS  No.123, Accounting for
Stock-Based  Compensation,  ("SFAS  123"),  to  provide  alternative  transition
methods  for  an  entity's  voluntary change in their accounting for stock-based
compensation from the intrinsic value method prescribed by Accounting Principles
Board  Opinion  No. 25, Accounting for Stock Issued to Employees, ("APB No. 25")
and  related  interpretations  to  the  fair  value  method  under SFAS 123.  In
addition,  SFAS  No.  148  amends the disclosure requirements of SFAS No. 123 to
require  disclosure  of  the pro forma effects of using the fair value method of
accounting  for  stock-based compensation in interim as well as annual financial
statements.  The  Company  currently  accounts  for its stock-based compensation
using  the  intrinsic  value method as prescribed by APB No. 25.  The disclosure
provisions  of  SFAS No. 148 were adopted on December 31, 2002 and are discussed
in  Note  2.

Revenue  Recognition

The  Company recognizes revenue for over-the-counter sales as transactions occur
and  other sales upon shipment of product provided that there are no significant
post-delivery  obligations to the customer and collection is reasonably assured,
which  generally  occurs  upon  shipment.  Net  sales represent gross sales less
negotiated  price  allowances,  product  returns,  and  allowances for defective
merchandise.

Inventory

Inventory  is  stated at the lower of cost or market and is accounted for on the
"first  in,  first  out"  method.  In  addition,  the  value  of  inventory  is
periodically reduced for slow-moving or obsolete inventory based on management's
review  of  items  on  hand  compared  to  their  estimated  future  demand.
                                        7
<PAGE>

The  components  of  inventory  consist  of  the  following:
<TABLE>
<CAPTION>


                                            AS OF
                                    MARCH 31,   DECEMBER 31,
                                      2003          2002
<S>                                <C>           <C>
                                   -----------   -----------
Finished goods held for sale       $11,447,127   $11,693,868
Raw materials and work in process    1,225,458     1,001,476
                                   -----------   -----------
                                   $12,672,585   $12,695,344
                                   ===========   ===========
</TABLE>

Goodwill  and  Other  Intangibles

Statement  of  Financial  Accounting  Standards  ("SFAS") No. 142, "Goodwill and
Other  Intangible Assets," prescribes a two-phase process for impairment testing
of  goodwill, which is performed once annually, absent indicators of impairment.
The  first  phase  screens for impairment, while the second phase (if necessary)
measures  the  impairment.  As  a  result of SFAS 142, we incurred an impairment
write-down  in  the  first  quarter of 2002 of our investment in our subsidiary,
Roberts,  Cushman & Company, Inc., in the amount of $4.0 million.  The remaining
goodwill  on  our  balance  sheet  is  analyzed  by  management  periodically to
determine  the  appropriateness  of its carry value.  We have elected to perform
our  annual  analysis  during  the  fourth calendar quarter of each year.  As of
December  31,  2002,  management  determined  that  the  present  value  of  the
discounted  estimated  future  cash  flows  of  the  stores  associated with the
goodwill  is  sufficient  to  support  their  respective  goodwill balances.  No
indicators  of  impairment  were  identified  during  the first quarter of 2003.

Other  intangibles  consist  of  the  following:
<TABLE>
<CAPTION>


                                         AS OF MARCH 31, 2003                  AS OF DECEMBER 31, 2002
                              --------------------------------------      ----------------------------------
                                           ACCUMULATED                               ACCUMULATED
                                GROSS     AMORTIZATION        NET           GROSS    AMORTIZATION     NET
                              ---------   -------------  -----------      ---------  ------------   --------
<S>                           <C>         <C>            <C>              <C>        <C>            <C>
Trademarks, Copyrights        $544,369        $111,101     $433,268       $544,369     $102,029     $442,340
Non-Compete Agreements          52,000          14,500       37,500         52,000       10,833       41,167
                              ---------   -------------  -----------      ---------  ----------     --------
                              $596,369        $125,601      $470,768      $596,369     $112,862     $483,507
                              =========   =============  ===========      =========  ==========     ========
</TABLE>

The Company recorded amortization expense of $12,740 during the first quarter of
2003  compared  to $11,352 during the first quarter of 2002.  The Company has no
intangible  assets  not  subject  to  amortization under SFAS 142.  Based on the
current  amount  of  intangible  assets  subject  to amortization, the estimated
amortization  expense  for  each  of  the  succeeding  5  years  are as follows:
<TABLE>
<CAPTION>

                                        ROBERTS
      LEATHER FACTORY   TANDY LEATHER   CUSHMAN    TOTAL
      ----------------  --------------  --------  -------
<S>   <C>               <C>             <C>       <C>
2003       $5,918          $45,004         $0     $50,922
2004        5,918           45,004          0      50,922
2005        5,918           35,004          0      40,922
2006        5,918           34,337          0      40,255
2007        5,918           33,504          0      39,422
</TABLE>

                                        8
<PAGE>

2.  STOCK-BASED  COMPENSATION
The  Company  accounts  for stock options granted to its directors and employees
using  the  intrinsic  value  method  prescribed  by  APB  No. 25 which requires
compensation  expense  be  recognized  for  stock options when the quoted market
price  of  the  Company's common stock on the date of grant exceeds the option's
exercise  price.  No  compensation cost has been reflected in net income for the
granting  of  director  and employee stock options as all options granted had an
exercise price equal to the quoted market price of the Company's common stock on
the  date  the  options  were  granted.

Had compensation cost for the Company's stock options been determined consistent
with  the  SFAS 123 fair value approach, the Company's net income and net income
per  common  share  for the three months ended March 31, 2003 and 2002, on a pro
forma  basis,  would  have  been  as  follows:
<TABLE>
<CAPTION>

                                                                                2003        2002
                                                                              --------  ------------
<S>                                                                           <C>       <C>
Net income (loss), as reported                                                $774,518  $(3,249,526)

Add: Stock-based compensation expense included in reported net income (loss)      -            -

Deduct: Stock-based compensation expense determined under fair value method     20,266        25,905
                                                                              --------  ------------
Net income (loss), pro forma                                                  $754,252  $(3,275,431)
                                                                              ========  ============

Net income (loss) per share:
Basic - as reported                                                              $0.08       $(0.32)
Basic - pro forma                                                                $0.07       $(0.33)

Diluted - as reported                                                            $0.07       $(0.30)
Diluted - pro forma                                                              $0.07       $(0.31)
</TABLE>

The  fair  values  of stock options granted were estimated on the dates of grant
using the Black-Scholes option pricing model with the following weighted average
assumptions:  risk-free interest rate of 3.00% for both periods; dividend yields
of  0%  for both periods; volatility factors of .725 for 2003 and .736 for 2002;
and  an  expected  life  of  the  valued  options  of  5  years.
                                        9
<PAGE>

3.  EARNINGS  PER  SHARE

The following table sets forth the computation of basic and diluted earnings per
share  ("EPS"):


                                                    THREE MONTHS ENDED MARCH 31,
                                                    ----------------------------
<TABLE>
<CAPTION>
                                                        2003          2002
<S>                                                  <C>          <C>
Net income (loss) . . . . . . . . . . . . . . . . .  $   774,518  $(3,249,526)
                                                     -----------  ------------
Numerator for basic and diluted earnings per share.      774,518   (3,249,526)


Denominator for basic earnings per share -
  Weighted-average shares . . . . . . . . . . . . .   10,177,433   10,001,717

Effect of dilutive securities:
  Stock options . . . . . . . . . . . . . . . . . .      442,884      482,800
  Warrants. . . . . . . . . . . . . . . . . . . . .      173,147      247,196
                                                     -----------  ------------
Dilutive potential common shares. . . . . . . . . .      616,031      729,996
                                                     -----------  ------------
Denominator for diluted earnings per share -
  weighted-average shares . . . . . . . . . . . . .   10,793,464   10,731,713
                                                     ===========  ============
  Basic earnings (loss) per share . . . . . . . . .  $      0.08  $     (0.32)
                                                     ===========  ============
  Diluted earnings (loss) per share . . . . . . . .  $      0.07  $     (0.30)
                                                     ===========  ============
</TABLE>

The  net  effect  of  converting  stock  options to purchase 747,200 and 844,000
shares  of common stock at option prices less than the average market prices has
been included in the computations of diluted EPS for the quarter ended March 31,
2003  and  2002,  respectively.


4.  SEGMENT  INFORMATION

The  Company  identifies  its segments based on the activities of three distinct
businesses:

A.     THE LEATHER FACTORY, which sells primarily to wholesale customers through
a  chain  of  30  outlet  stores  located  in  the  United  States  and  Canada;

b.     TANDY LEATHER COMPANY, which sells primarily to retail customers through
a  chain  of  retail  stores  located  in  the  United  States;  and

c.     ROBERTS,  CUSHMAN  &  COMPANY,  manufacturer of decorative hat trims sold
directly  to  hat  manufacturers  and  distributors.

The  Company's  reportable operating segments have been determined as separately
identifiable business units.  The Company measures segment earnings as operating
earnings,  defined  as  income  before  interest  and  income  taxes.
                                       10
<PAGE>

<TABLE>
<CAPTION>


                                       THE LEATHER FACTORY    TANDY LEATHER COMPANY   ROBERTS, CUSHMAN & CO      TOTAL
                                       -------------------    ---------------------   ---------------------   -----------
FOR THE QUARTER ENDED MARCH 31, 2003
<S>                                    <C>                    <C>                     <C>                     <C>
Net sales                                  $8,201,258              $1,864,539                $494,288         $10,560,085
Gross profit                                4,297,502               1,181,332                 166,670           5,645,504
Operating earnings                            923,637                 146,993                  45,042           1,115,672
Interest expense                              (63,352)                   -                       -                (63,352)
Other, net                                     31,290                    (472)                   -                 30,818
                                                                                                             ------------
Income before income taxes                    891,575                 146,521                  45,042           1,083,138
                                                                                                             ------------
Depreciation and amortization                 106,367                  15,839                   2,825             125,031
Fixed asset additions                          39,497                  54,475                     -                93,972
Total assets                              $17,364,513              $2,447,611                $845,938         $20,658,062
                                          -----------         ---------------          --------------         -----------
</TABLE>

<TABLE>
<CAPTION>

FOR  THE  QUARTER  ENDED  MARCH  31,  2002
<S>                                    <C>                    <C>                     <C>                     <C>
Net sales                              $ 7,824,517            $   1,877,874           $  501,560              $ 10,203,951
Gross profit                             4,126,872                1,073,579              168,144                 5,368,595
Operating earnings                         975,727                  141,501               76,231                 1,193,459
Interest expense                           (89,655)                    (214)                -                     (89,869)
Other, net                                 (15,854)                    (501)                -                     (16,355)
                                                                                                              ------------
Income  before  income  taxes
  &  change  in  accounting  principle     870,218                  140,786               76,231                 1,087,235
                                                                                                              ------------
Depreciation and amortization              132,946                   23,703                3,382                   160,031
Fixed asset additions                       71,529                   25,513                  580                    97,622
Total assets                          $ 11,928,363             $  2,530,336           $  854,585              $ 15,313,284
                                      ------------             ------------           ----------              ------------
</TABLE>

Net  sales  for  geographic  areas  were  as  follows:

                            THREE  MONTHS  ENDED
<TABLE>
<CAPTION>
                     MARCH 31, 2003   MARCH 31, 2002
                     ---------------  --------------
<S>                  <C>              <C>
United States            $9,870,636       $9,662,434
All other countries         689,449          541,517
                     ---------------  --------------
                        $10,560,085      $10,203,951
                     ===============  ==============
</TABLE>


Geographic  sales  information  is  based  on the location of the customer.  Net
sales  from no single foreign country was material to the Company's consolidated
net  sales  for  the  three-month  periods  ended  March 31, 2003 and 2002.  The
Company  does  not  have any significant long-lived assets outside of the United
States.
                                       11
<PAGE>


ITEM  2.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION
AND  RESULTS  OF  OPERATIONS.


The  Leather  Factory,  Inc.  ("TLF" or the "Company") is a Delaware corporation
whose common stock trades on the American Stock Exchange under the symbol "TLF".
The  Company  is managed on a business entity basis, with those businesses being
The  Leather  Factory  ("Leather  Factory"),  Tandy  Leather Company ("Tandy" or
"Tandy  Leather"), and Roberts, Cushman & Company, Inc. ("Cushman").  See Note 4
to  the  Consolidated Financial Statements for additional information concerning
the  Company's  segments,  as  well  as  its  foreign  operations.

Leather  Factory,  founded  in 1980 by Wray Thompson and Ron Morgan, distributes
leather  and  related  products,  including  leatherworking  tools,  buckles and
adornments  for  belts, leather dyes and finishes, saddle and tack hardware, and
do-it-yourself  kits.  The  products are sold primarily through 30 company-owned
outlets  located  throughout  the  United  States  and  Canada.

Tandy  Leather  is  the  oldest  and  best-known supplier of leather and related
supplies  used  in  the leathercraft industry.  From its founding in 1919, Tandy
has been the primary leathercraft resource world wide.  Products include quality
tools,  leather,  accessories,  kits  and teaching materials.  In early 2002, we
initiated  a  plan  to  expand  Tandy by opening retail stores.  As of April 30,
2003,  we  have  opened  20  Tandy  Leather retail stores located throughout the
United  States.

Cushman,  whose  origins  date  back  to  the  mid-1800's,  custom  designs  and
manufactures  a product line of decorative hat trims for headwear manufacturers.

CRITICAL  ACCOUNTING  POLICIES

A  description of the Company's critical accounting policies appears in "Item 2.
Management's  Discussions  and  Analysis  of  Financial Condition and Results of
Operations"  in  the  Company's  Annual  Report  on Form 10-K for the year ended
December  31,  2002.


RESULTS  OF  OPERATIONS

The  following  tables  present selected financial data of each of the Company's
three  segments  for  the  quarters  ended  March  31,  2003  and  2002:
<TABLE>
<CAPTION>

                         QUARTER ENDED MARCH 31, 2003    QUARTER ENDED MARCH 31, 2002
                         ----------------------------    ----------------------------
                                          OPERATING                      OPERATING
                              SALES        INCOME              SALES       INCOME
                           ----------   -----------         -----------  ----------
<S>                       <C>           <C>                 <C>          <C>
Leather Factory            $8,201,258    $  923,637         $ 7,824,517  $  975,727
Tandy                       1,864,539       146,993           1,877,874     141,501
Cushman                       494,288        45,042             501,560      76,231
                          -----------    ---------          -----------  ----------
Total Operations          $10,560,085    $1,115,672         $10,203,951  $1,193,459
                          ===========    ==========         ===========  ==========
</TABLE>

Consolidated  net sales for the quarter ended March 31, 2003 increased $356,000,
or  3.5%,  compared  to  the  same  period in 2002.  Leather Factory contributed
$377,000  to  the  increase  while Tandy and Cushman recorded sales decreases of
$13,000  and $7,000, respectively.  Operating income on a consolidated basis for
the quarter ended March 31, 2003 was down 6.5% or $78,000 over the first quarter
of  2002.

                                       12
<PAGE>
<TABLE>
<CAPTION>
                           QUARTER              QUARTER          INCR
                         ENDED 3/31/03        ENDED 3/31/02      (DECR)        % CHANGE
                         -------------        -------------     ----------     --------
<S>                      <C>                  <C>               <C>            <C>
Same Store Sales           $ 8,982,895           $8,473,695       $509,200        6.01%
New Store Sales              1,576,131              $27,688     $1,548,443          N/A
Closed Store Sales               1,059            1,702,568     (1,701,509)         N/A
                         -------------          -----------     ----------     --------
Total                      $10,560,085          $10,203,951       $356,134        3.49%
                         =============          ===========     ==========     ========
</TABLE>

Same  store  sales  includes  29  Leather  Factory stores, two Tandy stores, and
Cushman.  New  store  sales  includes  one  Leather  Factory  store and 17 Tandy
stores.  Stores  opened for less than half of the reporting period last year are
classified  as  new stores in the current reporting period.  The closed store in
the  table  above  was  the Tandy order fulfillment house that was eliminated on
September  1,  2002.

LEATHER  FACTORY  OPERATIONS

Net sales from Leather Factory's 30 stores increased 4.81% for the first quarter
of  2003  as  follows:
<TABLE>
<CAPTION>
<S>                                           <C>         <C>         <C>         <C>
                                              QTR ENDED   QTR ENDED    $ INCR      % INCR
                                               3/31/03     3/31/02      (DECR)     (DECR)
                                              ----------  ----------  ---------   --------
Same store sales (29 stores) . . . . . . . .  $8,085,989  $7,693,515  $ 392,474      5.10%
New store sales (1 store). . . . . . . . . .     115,269           -    115,269       ***
"Transferred to Tandy" store sales (1 store)           -     131,002   (131,002)  (100.0%)
                                              ----------  ----------  ---------   --------
Total sales. . . . . . . . . . . . . . . . .  $8,201,258  $7,824,517  $ 376,741      4.81%
                                              ==========  ==========  =========   ========
</TABLE>

The  following  table  presents  TLF's  sales mix by customer categories for the
quarters  ended  March  31,  2003  and  2002:
<TABLE>
<CAPTION>
                                                                                                   QUARTER ENDED
<S>                                                                                              <C>          <C>
CUSTOMER GROUP                                                                                   3/31/03      3/31/02
--------------                                                                                   -------      -------
RETAIL (end users, consumers, individuals)                                                           23%           21%
INSTITUTION (prisons, prisoners, hospitals, schools, YMCA, Boy Scouts, etc.)                          7             7
WHOLESALE (saddle & tack stores, resellers & distributors, shoe repair shops, dealers, etc.)         31            32
CRAFT (craft stores (individually owned) and craftstore chains)                                      24            26
MIDAS (small manufacturers)                                                                           8             7
ASC (Authorized Sales Centers)                                                                        7             7
                                                                                                 -------      -------
                                                                                                   100%           100%
                                                                                                 =======      =======
</TABLE>
                                       13
<PAGE>

Our  biggest  sales  gains  were  in  our RETAIL and MIDAS customer groups.  Our
retail  sales  were  up  approximately  18%  over  those  same sales a year ago,
primarily  the  result  of  the  additional  sales  generated  by our Fort Worth
flagship  store.  This  store  is  our  only store in the U.S. that carries full
lines  of  both  Leather  Factory  and  Tandy Leather products.  In addition, we
remodeled  this  store  in  late  2002 to accommodate and encourage more retail,
walk-in  traffic.  Our  MIDAS  sales increased approximately 28% over last year.
Due to the instability of the general economy, our small manufacturing customers
are  trying  to avoid committing large amounts of their cash for bulk purchases,
particularly  on  items that they normally import.  Therefore, we have been able
to  generate  sales  by  providing  merchandise  in smaller quantities on a more
frequent  basis  to  these  manufacturers.  These customers are willing to pay a
slightly  higher  price  for  goods  from  us in order to mange their cash flow.
Sales  to  our CRAFT customers were off slightly (approximately $100,000) due to
the  timing  of  orders  shipped  around  the  end  of  the  quarter.

Operating  income for Leather Factory decreased $52,000 or 5.3% of sales for the
current  quarter  compared to 2002.  Operating expenses as a percentage of sales
were  41.3%,  off  slightly  ($93,000)  from  our  target  of 40% of sales.  Our
insurance  programs  -  particularly employee health benefits - have experienced
significant  cost increases.  Also, the Company's increased emphasis on investor
relations  added  to  these  expenses.  We  monitor these expenses closely in an
effort  to  optimize the value received by the Company.  In computing net income
by  segment,  most of these administrative expenses are allocated to the Leather
Factory  segment.

TANDY  LEATHER  OPERATIONS

Net  sales  for Tandy, which consisted of nineteen retail stores as of March 31,
2003,  were  down 0.71% for the first quarter of 2003 over the same quarter last
year,  which  consisted of two retail stores and the order fulfillment house, as
follows:

<TABLE>
<CAPTION>
                                                          QTR ENDED   QTR ENDED      $INCR       % INCR
                                                           3/31/03     3/31/02       (DECR)      (DECR)
                                                          ---------   ---------    ---------    -------
<S>                                                       <C>         <C>        <C>          <C>
Same store sales (1 store)                                 $216,478    $147,618     $68,860      46.65%
New store sales (17 stores)                               1,460,862      27,688   1,433,174         ***
"Transferred from Leather Factory" store sales (1 store)    186,140        -        186,140         ***
Closed store (order fulfillment house)                        1,059   1,702,568  (1,701,509)   (100.00)
                                                          ---------   ---------  ---------     --------
Total sales                                              $1,864,539  $1,877,874    $(13,335)    (0.71%)
                                                         ==========  ==========  ==========    ========
</TABLE>
                                       14
<PAGE>

A  store  is categorized as "new" as long as it was opened less than half of the
comparable  period  in the prior year.  In the above table, the sales amount for
"new  store  sales"  for  the quarter ended March 31, 2002 represents our Boise,
Idaho  store sales in that period because that store was only open for one month
in  the  period  (it  was  opened  on  March  1,  2002).

Sales in the current quarter were off slightly compared to a year ago - although
as  the  table  above  indicates,  the  comparison is retail stores to the order
fulfillment  house.  The  single  "same  store" sales results are encouraging as
that  store  was opened for the entire quarter in both years.  The "transferred"
store  is producing strong gains as well - compared to the sales being generated
as  a  Leather  Factory store a year ago.  (See Leather Factory's table for last
year's  sales amount.)  The retail stores that are at least three months old are
averaging  approximately  $37,000  in  sales per month, which is better than our
projections  of  $30,000  per  month  per  store.

The  following  table  presents Tandy's sales mix by customer categories for the
quarters  ended  March  31,  2003  and  2002:
<TABLE>
<CAPTION>
                                                                                                  QUARTER ENDED
<S>                                                                                           <C>           <C>
CUSTOMER GROUP                                                                                   3/31/03      3/31/02
--------------                                                                                -----------   ---------
RETAIL (end users, consumers, individuals)                                                           72%          61%
INSTITUTION (prisons, prisoners, hospitals, schools, YMCA, Boy Scouts, etc.)                           5           12
WHOLESALE (saddle & tack stores, resellers & distributors, shoe repair shops, dealers, etc.)          19           11
CRAFT (craft stores (individually owned) and craftstore chains)                                        -            1
MIDAS (small manufacturers)                                                                            -            -
ASC (Authorized Sales Centers)                                                                         4           15
                                                                                              -----------   ---------
                                                                                                    100%         100%
                                                                                              ===========   =========
</TABLE>

Operating  income for Tandy increased marginally ($5,500) in the current quarter
due  primarily  to  an  increase  in  gross  profit  margin  of  approximately 6
percentage  points  but  offset by an increase in operating expenses.  Operating
expenses  were  55%  of sales in the current quarter compared to 50% in the same
quarter  last  year.  Employee health costs contributed somewhat to the increase
(cost  of  health care is rising, plus there are more employees participating in
the  benefit program this year).  In addition, management's policy is to expense
store set-up costs (tables, shelving, displays, etc.) in the first month a store
generates  sales,  regardless  of  when  in the month those sales begin.  In the
first quarter of 2003, three of the five stores opened in the first quarter were
opened  in  the  last  30  days  of  the  quarter.  Therefore, set-up costs were
incurred  and  included  in  operating  expenses  before the stores can generate
sufficient  sales  to offset these costs.  Despite this conservative policy, new
Tandy  stores  continued  the trend of generating profits in the second month in
which  they  are  opened.

ROBERTS,  CUSHMAN  OPERATIONS

Net sales for Cushman decreased $7,300 for the first quarter of 2003, although a
slight improvement in gross profit margin (0.2%) was achieved.  Operating income
for Cushman decreased $31,000 due to increases in insurance costs and bad debts.
A  customer  went  out  of  business  in the first quarter of 2003 owing Cushman
approximately  $9,000.  Despite  the number of new customer inquiries Cushman is
receiving  currently,  management is monitoring its accounts closely in order to
avoid  further  uncollectible  accounts.

OTHER  EXPENSES

Interest  expense in the first quarter of 2003 ($63,352) was down 29.5% from the
first quarter of 2992 ($89,869).  This change was attributable to a reduction in
the interest rate for the first quarter of 2003 compared to the first quarter of
2002.
                                       15
<PAGE>

CAPITAL  RESOURCES,  LIQUIDITY  AND  FINANCIAL  CONDITION

There  was a slight change (less than 5%) in our consolidated balance sheet from
December 31, 2002 to March 31, 2003.  Total assets increased from $19,675,602 at
year-end  to $20,658,062 at March 31.  Our accounts receivable accounted for the
majority of the increase.  Total stockholders' equity increased from $11,170,062
at December 31, 2002 to $12,002,845 at March 31, 2003.  Most of the increase was
from  earnings  in  the  first  quarter  of  this  year.

Inventory  decreased  minimally  ($23,000) at March 31, 2003 from year-end 2002.
Inventory  turnover  decreased  to  an  annualized rate of 3.47 times during the
first  quarter  of 2003, a slight slowdown from 3.93 times for the first quarter
of  2002 and 3.65 times for all of 2002.  The slowdown in turns is due primarily
to  the  increased  amounts  of  inventory  at  the end of 2002.  We compute our
inventory turns as sales divided by average inventory.  As we stated in our 2002
Form  10-K,  our  inventory  was  above normal and expected levels at the end of
2002,  primarily  due to our attempts to optimize that inventory during the West
Coast  dock  strike  in  the  later  part  of  the third quarter of 2002 and the
eventual  unwinding  of  the  backlog of shipments in the fourth quarter of 2002
after  the strike ended.  We reduced our inventory purchases considerably in the
first  quarter  of  2003  but  do  not  expect  to  realize the effects of these
decreased  purchases  until  the  second  quarter  of  2003.

The  Company's  investment  in accounts receivable was $2.8 million at March 31,
2003,  up  $829,000  from $1.9 million at year-end 2002.  This is a result of an
increase  in credit sales during the quarter ended March 31, 2003 as compared to
that  of  the  quarter  ended  December  31,  2002.  The average days to collect
accounts improved slightly over the first quarter of 2002 from 47.2 days to 43.6
days.  Both  Tandy  and  Leather  Factory posted the most improvement in average
days  to collect accounts, from 42.9 and 45.5 days in 2002 to 39.6 and 41.1 days
for  the  first  quarter  of  2003,  respectively.

Accounts  payable  decreased  $90,000  to  $1.5  million at the end of the first
quarter,  due  primarily  to  the  reduction  in  inventory purchases during the
period.  Accrued  expenses  and  other  liabilities decreased $1.5 million, from
$2.5  million  at  December  31,  2002  to  $1.0 million at March 31, 2003.  The
majority  of  this  decrease  reflects the payment of store managers' bonuses in
March  2003.  These  bonus payments were funded with borrowings on the Company's
revolving credit facility.  As a result, notes payable and current maturities of
long-term  debt  increased  from  $4,218,968 at the end of 2002 to $5,816,689 at
March  31,  2003.

The Company's current ratio fell slightly from 2.08 at December 31, 2002 to 2.03
at  March  31,  2003.  Generally accepted accounting principles ("GAAP") require
the  Company's  debt with Wells Fargo Bank Minnesota, N.A. ("Wells Fargo") to be
classified  as  short-term (even though the stated maturity is in November 2004)
because  our  credit  agreement  with  Wells  Fargo  includes  both a subjective
acceleration  clause  and  a requirement to maintain an arrangement whereby cash
collections  from  our  customers directly reduce the debt outstanding (Emerging
Issues  Task Force Issue 95-22).  If the accounting rules permitted this loan to
be  report  as  long-term indebtedness, the Company's current ratio at March 31,
2003  would  have  been  6.52,  a  difference of 4.44.  Management believes that
disclosure  of  the  non-GAAP information aids the reader's understanding of the
Company's  balance  sheets.

During  the  first  quarter of 2003, cash flows used in operating activities was
$1.6  million.  The  annual manager bonus payments accounted for the majority of
the  operating  cash  used  during  the  quarter.  Cash  flows used in investing
activities  totaled  $105,000,  the  majority  of  which was for the purchase of
equipment in the amount of $94,000.  Most of the equipment purchased was for the
new  Tandy  stores  opened during the quarter and computer equipment upgrades in
existing  stores.  Cash flows provided by financing activities was $1.7 million,
representing our net borrowings against our revolving credit facility during the
quarter.

We  expect  to  fund  our  operating  and liquidity needs as well as our current
expansion  of  Tandy's  retail  store  chain  from a combination of current cash
balances,  internally  generated  funds  and  our revolving credit facility with
Wells  Fargo,  which  is based upon the level of the our accounts receivable and
inventory.    At  March 31, 2003, the available and unused portion of the credit
facility  was  approximately  $1,351,000.
                                       16
<PAGE>

FORWARD-LOOKING  STATEMENTS
---------------------------

This  report  (particularly  this Item 2) contains forward-looking statements of
management.  In  general,  these are predictions or suggestions of future events
and  statements  or  expectations  of  future  trends  or occurrences. There are
certain important risks that could cause results to differ materially from those
anticipated by some of the forward-looking statements. Some, but not all, of the
important risks which could cause actual results to differ materially from those
suggested  by  the  forward-looking  statements  include,  among  other  things:

-     Involvement  by  the United States in war and other military operations in
the  Middle  East  could  disrupt  international  trade and affect the Company's
inventory  sources.

-     The  recent  slump in the economy in the United States, as well as abroad,
may  cause  our  sales  to  decrease  or not to increase or adversely affect the
prices  charged  for our products.  Also, hostilities, terrorism or other events
could  worsen  this  condition.

-     As  a  result  of  the  on-going threat of terrorist attacks on the United
States,  consumer  buying  habits  could  change  and  decrease  our  sales.

-     The prices of hides and leathers also fluctuate in normal times, and these
fluctuations  can  affect  the  Company.

-     If,  for  whatever  reason,  the  costs of our raw materials and inventory
increase,  we  may  not  be  able  to  pass  those  costs  on  to our customers,
particularly  if  the  economy  has  not  recovered  from  its  downturn.

-     Other  factors  could  cause  either  fluctuations  in  buying patterns or
possible  negative  trends in the craft and western retail markets. In addition,
our  customers may change their preferences to products other than ours, or they
may  not  accept  new  products  as  we  introduce  them.

-     We  might fail to realize the anticipated benefits of the opening of Tandy
Leather  retail  stores  or  other  retail  initiatives might not be successful.

-     Tax  or  interest rates might increase.  In particular, interest rates are
likely to increase at some point from their present low levels.  These increases
will  increase  our  costs  of  borrowing  funds  as  needed  in  our  business.

-     Any  change  in  the  commercial banking environment may affect us and our
ability  to  borrow  capital  as  needed.

-     Other  uncertainties, which are difficult to predict and many of which are
beyond  the  control  of  the  Company,  may  occur  as  well.

The  Company  does  not  intend  to  update  forward-looking  statements.

ITEM  3.  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK.

For  disclosures  about  market  risk  affecting  the  Company,  see  Item  7A
"Quantitative  and  Qualitative  Disclosures  About  Market  Risk" in our Annual
Report  on  Form  10-K for our fiscal year ended December 31, 2002.  The Company
believes  that  its exposure to market risks has not changed significantly since
December  31,  2002.
                                       17
<PAGE>

ITEM  4.  CONTROLS  AND  PROCEDURES

(a)  As  of  a  date  within  ninety  (90)  days of the date of this report (the
"Evaluation  Date"),  our President, Chief Executive Officer and Chief Financial
Officer  evaluated  the  effectiveness  of  the  design  and  operation  of  our
disclosure  controls and procedures pursuant to Rule 13a-14 under the Securities
Exchange  Act  of  1934,  as  amended  (the  "Exchange  Act").  Based  upon this
evaluation,  they  have  concluded  that,  subject  to  the  limitations  on the
effectiveness of the controls described below, the Company's disclosure controls
and  procedures  are  sufficiently  effective  to  ensure  that  the information
required  to  be  disclosed  by  the  Company  in the reports it files under the
Exchange  Act  is  gathered,  analyzed  and  disclosed with adequate timeliness,
accuracy  and  completeness.

(b)  There  have  been no significant changes in the Company's internal controls
or in other factors that could significantly affect these controls subsequent to
the  date  of  the  evaluation referred to above. No significant deficiencies or
material  weaknesses  in  the  Company's  internal  controls  were  observed.
Accordingly,  no  corrective  actions  were  undertaken.

Limitations  on  the  Effectiveness  of Controls.  Our management, including the
President,  Chief Executive Officer and Chief Financial Officer, does not expect
that  the Company's disclosure controls and procedures or the Company's internal
controls  will prevent all error and all fraud.  A control system, no matter how
well conceived and operated, is based in part upon certain assumptions about the
likelihood  of  future  events  and  can  provide only reasonable, not absolute,
assurance  that  the  objectives  of  the  control system are met.  Further, the
design  of  a  control  system  must  reflect  the  fact that there are resource
constraints,  and  the benefits of controls must be considered relative to their
costs.  Because  of  the  inherent  limitations  in  all  control  systems,  no
evaluation  of  controls  can provide absolute assurance that all control issues
and  instances  of  fraud,  if  any,  within  the  Company  have been or will be
detected.

PART  II.  OTHER  INFORMATION

ITEM  2.  CHANGES  IN  SECURITIES

On  February  12,  2003,  the  Company  entered  into a Capital Markets Services
Engagement  Agreement  ("Services  Agreement")  with  Westminster  Securities
Corporation  ("Westminster"),  a  member  firm  of  the New York Stock Exchange.
Under  the  Services  Agreement,  Westminster agreed to provide the Company with
capital market services, including corporate finance advisory services, research
services,  and  sales  and  trading  services.

For  the  services  to  be  provided  during  the  one-year term of the Services
Agreement,  the  Company paid a $6,000 retainer fee and agreed to pay $4,000 per
month  during  the contract's term.  Also, the Company issued to Westminster and
certain  named  employees  warrants  to purchase 100,000 shares of the Company's
common  stock at an exercise price of $3.10 per share, subject to adjustment for
certain  issuances  at a per share price below $3.10 that might occur during the
five-year  term  of  the  warrants.

The  issuance  of  the warrants was exempt from the registration requirements of
the  Securities  Act  of 1933 pursuant to Section 4(2) of that act.  The related
Financial  Advisor's Warrant Agreement, dated as of February 12, 2003, contained
representations  as to investment intent and restrictions on transfer.  Also the
warrant  certificates  contain  prominent  legends  stating  the restrictions on
transfer.

In  addition,  the  Financial  Advisor's  Warrant  Agreement  grants  demand and
piggyback  registration  rights  to  the  holders  of the warrants to facilitate
resale  of  the  Company's  common  stock  upon  exercise  of  the  warrants.

ITEM  6.  EXHIBITS  AND  REPORTS  ON  FORM  8-K
                                       18
<PAGE>

(a)  Exhibits
     --------
<TABLE>
<CAPTION>

<S>             <C>
EXHIBIT NUMBER  EXHIBIT
--------------  ------------------------------------------------------------------------
      4.1       Financial Advisor's Warrant Agreement, dated February 12, 2003,
                   between The Leather Factory, Inc. and Westminster Securities
      4.2       Capital Markets Services Engagement Agreement, dated February
                   12, 2003, between The Leather Factory, Inc. and Westminster
                   Securities Corporation
     99.1       Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
                   to Section 906 of the Sarbanes-Oxley Act of 2002
</TABLE>

(b)  Reports  on  Form  8-K

On  April 23, 2003, the Company filed a report on Form 8-K in which we furnished
under Item 9 the press release entitled "The Leather Factory Reports 1st Quarter
2003  Results" relating to the result of our first quarter ended March 31, 2003.

                                   SIGNATURES

Pursuant  to  the  requirements  of the Securities and Exchange Act of 1934, the
registrant  has  duly  caused  this  report  to  be  signed on its behalf by the
undersigned  thereunto  duly  authorized.

                                         THE  LEATHER  FACTORY,  INC.
                                                (Registrant)

Date:  May  12,  2003                 By:   /s/  Wray  Thompson
                                            -------------------
                                            Wray  Thompson
                                            Chairman  of  the  Board  and
                                             Chief  Executive  Officer

Date:  May  12,  2003                 By:  /s/Shannon  L.  Greene
                                           ----------------------
                                           Shannon  L.  Greene
                                           Chief  Financial  Officer  and
                                            Treasurer (Chief Accounting Officer)
                                       19
<PAGE>

                                 CERTIFICATIONS

I,  Wray  Thompson,  certify  that:
1.  I  have  reviewed this quarterly report on Form 10-Q of The Leather Factory,
Inc.;
2.  Based  on  my  knowledge,  this quarterly report does not contain any untrue
statement  of a material fact or omit to state a material fact necessary to make
the  statements  made, in light of the circumstances under which such statements
were  made,  not misleading with respect to the period covered by this quarterly
report;
3.  Based  on  my  knowledge,  the  financial  statements,  and  other financial
information  included  in  this quarterly report, fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods presented in this quarterly report;
4.  The  registrant's  other  certifying  officers  and  I  are  responsible for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rule  13a-14  and  15d-14)  for  the  registrant  and  we  have:
a)  designed  such  disclosure  controls  and procedures to ensure that material
information  relating  to  the  registrant,  including  its  consolidating
subsidiaries,  is made known to us by others within those entities, particularly
during  the  period  in  which  this  quarterly  report  was  prepared;
b)  evaluated  the  effectiveness  of  the  registrant's disclosure controls and
procedures  as  of  a  date  within  90  days  prior  to the filing date of this
quarterly  report  (the  "Evaluation  Date");  and
c)  presented  in  this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on the required evaluation as of
the  Evaluation  Date;
5.  The  registrant's  other  certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of  registrant's  board  of  directors  (or  persons  performing  the equivalent
function):
a)  all significant deficiencies in the design or operation of internal controls
which  could  adversely  affect  the  registrant's  ability  to record, process,
summarize  and  report  financial  data and have identified for the registrant's
auditors  any  material  weaknesses  in  internal  controls;  and
b)  any  fraud,  whether  or  not  material,  that  involves management or other
employees who have a significant role in the registrant's internal controls; and
6.  The  registrant's  other  certifying  officers  and I have indicated in this
quarterly  report  whether  or  not  there  were significant changes in internal
controls  or  in other factors that could significantly affect internal controls
subsequent  to  the date of our most recent evaluation, including any corrective
actions  with  regard  to  significant  deficiencies  and  material  weaknesses.

Date:     May  13,  2003                  /s/  Wray  Thompson
                                          -------------------
                                          Wray  Thompson
                                          President  and  Chief  Executive
                                           Officer (principal executive officer)

                                    ********
                                       20
<PAGE>

I,  Shannon  L.  Greene,  certify  that:

1.  I  have  reviewed this quarterly report on Form 10-Q of The Leather Factory,
Inc.;
2.  Based  on  my  knowledge,  this quarterly report does not contain any untrue
statement  of a material fact or omit to state a material fact necessary to make
the  statements  made, in light of the circumstances under which such statements
were  made,  not misleading with respect to the period covered by this quarterly
report;
3.  Based  on  my  knowledge,  the  financial  statements,  and  other financial
information  included  in  this quarterly report, fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods presented in this quarterly report;
4.  The  registrant's  other  certifying  officers  and  I  are  responsible for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rule  13a-14  and  15d-14)  for  the  registrant  and  we  have:
a)  designed  such  disclosure  controls  and procedures to ensure that material
information  relating  to  the  registrant,  including  its  consolidating
subsidiaries,  is made known to us by others within those entities, particularly
during  the  period  in  which  this  quarterly  report  was  prepared;
b)  evaluated  the  effectiveness  of  the  registrant's disclosure controls and
procedures  as  of  a  date  within  90  days  prior  to the filing date of this
quarterly  report  (the  "Evaluation  Date");  and
c)  presented  in  this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on the required evaluation as of
the  Evaluation  Date;
5.  The  registrant's  other  certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of  registrant's  board  of  directors  (or  persons  performing  the equivalent
function):
a)  all significant deficiencies in the design or operation of internal controls
which  could  adversely  affect  the  registrant's  ability  to record, process,
summarize  and  report  financial  data and have identified for the registrant's
auditors  any  material  weaknesses  in  internal  controls;  and
b)  any  fraud,  whether  or  not  material,  that  involves management or other
employees who have a significant role in the registrant's internal controls; and
6.  The  registrant's  other  certifying  officers  and I have indicated in this
quarterly  report  whether  or  not  there  were significant changes in internal
controls  or  in other factors that could significantly affect internal controls
subsequent  to  the date of our most recent evaluation, including any corrective
actions  with  regard  to  significant  deficiencies  and  material  weaknesses.

Date:     May  13,  2003                /s/  Shannon  L.  Greene
                                        -------------------------
                                        Shannon  L.  Greene
                                        Chief Financial Officer  and  Treasurer
                                        (principal financial and
                                          accounting officer)
                                       21
<PAGE>

EXHIBIT  4.1

     FINANCIAL  ADVISOR'S  WARRANT  AGREEMENT  dated  as  of  February 12, 2003,
("Engagement  Date")  between  THE LEATHER FACTORY, INC., a Delaware corporation
(the  "Company"), and WESTMINSTER SECURITIES CORPORATION, a New York corporation
and  its assignees or designees (hereinafter referred to variously as a "Holder"
or  "Financial  Advisor").
                              W I T N E S S E T H:
WHEREAS,  the  Financial Advisor has agreed pursuant to the Engagement Agreement
dated  as  of  February  12,  2003  (the  "Engagement  Agreement"),  between the
Financial  Advisor  and the Company, to act as financial advisor to the Company.

WHEREAS,  pursuant  to  the  Engagement  Agreement,  the Company agreed to issue
warrants  to  the  Financial  Advisor  to purchase up to an aggregate of 100,000
shares  of  Common  Stock  (the  "Financial  Advisor's  Warrants");  and

WHEREAS,  the  Financial  Advisor's  Warrants  to  be  issued  pursuant  to this
Agreement  will  be issued to the Financial Advisor in consideration for, and as
part  of  the  compensation in connection with, the Financial Advisor's services
pursuant  to  the  Engagement  Agreement.

NOW,  THEREFORE,  in  consideration  of  the premises, the agreements herein set
forth  and other good and valuable consideration, the receipt and sufficiency of
which  are  hereby  acknowledged,  the  parties  hereto  agree  as  follows:

1.  GRANT. The Financial Advisor is hereby granted the right to purchase, at any
time  from  the  Engagement Date until 5:00 p.m., New York time, on February 12,
2008  (5  years  from  the  Engagement  Agreement),  at which time the Financial
Advisor's  Warrants  expire,  an  aggregate  of  100,000 shares of Common Stock,
subject to adjustment as provided in Section 11 hereof (the "Financial Advisor's
Securities").  Each Financial Advisor's Warrant shall entitle the holder thereof
to  purchase  one  (1)  share  of  common  stock, no par value per share, of the
Company  (the "Common Stock"), at an initial exercise price of $3.10 (as defined
in  Section  9.3(e))  (the  "Common  Stock  Exercise  Price").

2.  FINANCIAL  ADVISOR'S  WARRANT  CERTIFICATES. The Financial Advisor's warrant
certificates (the "Warrant Certificates") delivered and to be delivered pursuant
to  this  Agreement shall be in the form set forth in Exhibit A, attached hereto
and  made  a  part  hereof,  with  such  appropriate  insertions,  omissions,
substitutions,  and other variations as required or permitted by this Agreement.

3.  REGISTRATION  OF WARRANT. The Financial Advisor's Warrants shall be numbered
and  shall  be  registered  on  the  books  of  the  Company  when  issued.

4.  EXERCISE  OF  FINANCIAL  ADVISORS'S  WARRANT.

     4.1  METHOD  OF  EXERCISE.  The  Financial Advisor's Warrants initially are
exercisable  at  the  Common  Stock  Exercise  Price  (subject  to adjustment as
provided  in  Section  11  hereof)  per Financial Advisor's Warrant set forth in
Section  8  hereof  payable  by  certified  or  official  bank check in New York
Clearing  House  funds.  Upon  surrender  of  a  Financial  Advisor's  Warrant
Certificate  with  the  annexed  Form  of  Election  to  Purchase duly executed,
together  with  payment  of the Common Stock Exercise Price for shares of Common
Stock  purchased  at  the  Company's principal offices presently located at 3827
East  Loop  820  South,  Fort  Worth,  Texas  76119  the  registered holder of a
Financial  Advisor's  Warrant  Certificate  ("Holder"  or  "Holders")  shall  be
entitled to receive a certificate or certificates for the shares of Common Stock
so  purchased.  The  purchase  rights  represented  by  each Financial Advisor's
Warrant  Certificate  are  exercisable  at  the option of the Holder thereof, in
whole  or  in  part  (but  not  as to fractional shares underlying the Financial
Advisor's  Warrants) in increments of not less than 5,000 shares at one time. In
the  case  of  the purchase of less than all of the shares purchasable under any
Financial Advisor's Warrant Certificate, the Company shall cancel said Financial
Advisor's  Warrant  Certificate upon the surrender thereof and shall execute and
deliver  a  new  Financial  Advisor's  Warrant Certificate of like tenor for the
balance  of  the  shares  purchasable  thereunder.

     4.2  CASHLESS  EXERCISE. In addition to the right to exercise the Financial
Advisor's Warrant for cash pursuant to Section 4.1, Financial Advisor shall have
the right to exercise the Financial Advisor's Warrant (in whole but not in part)
by  the  surrender  of the Financial Advisor's Warrant (with the annexed Form of
Election  of  Cashless Exercise) at the office of the Company at any time during
the  term  of  the  Financial  Advisor's Warrant, into shares of Common Stock as
provided for in this Section 4.2. Upon exercise of this cashless exercise right,
Financial  Advisor  shall be entitled to receive that number of shares of Common
Stock  of the Company equal to the quotient obtained by dividing [(A - B)(X)] by
(A),  where:

(A)     =     the  Market  Price  (as defined in Section 9.3(e)) of one share of
Common  Stock  on  the  date  of  exercise  of  the Financial Advisor's Warrant.

(B)     =     the  Common  Stock  Exercise  Price  for one share of Common Stock
under  the  Financial  Advisor's  Warrant.

(X) =     the number of Shares issuable upon exercise of the Financial Advisor's
Warrant.

If  the above calculation results in a negative number, then no shares of Common
Stock  shall  be  issued  or  issuable  upon  cashless exercise of the Financial
Advisor's  Warrant.

Upon  any  cashless  exercise  of the Financial Advisor's Warrant, the Financial
Advisor  shall  be entitled to receive a certificate for the number of shares of
Common  Stock  determined  under  this  Section  4.2.

5.  ISSUANCE  OF  CERTIFICATES.  Upon  the  exercise  of the Financial Advisor's
Warrant,  the  issuance  of  certificates  for  securities, properties or rights
underlying  such Financial Advisor's Warrant shall be made forthwith (and in any
event  within  five  (5)  business days thereafter) without charge to the Holder
thereof  including,  without limitation, any tax which may be payable in respect
of  the issuance thereof, and such certificates shall (subject to the provisions
of Sections 7 and 9 hereof) be issued in the name of, or in such names as may be
directed  by,  the Holder thereof; provided, however, that the Company shall not
be  required  to  pay  any  tax  which may be payable in respect of any transfer
involved  in  the issuance and delivery of any such certificates in a name other
than  that  of  the  Holder  and  the  Company shall not be required to issue or
deliver  such  certificates unless or until the person or persons requesting the
issuance  thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.

6.  TRANSFER  OF  FINANCIAL  ADVISORS'S WARRANT. The Financial Advisor's Warrant
shall  be  transferable  only  on  the  books  of  the Company maintained at its
principal  office, where its principal office may then be located, upon delivery
thereof  duly  endorsed  by  the  Holder  or  by its duly authorized attorney or
Financial  Advisor  accompanied  by proper evidence of succession, assignment or
authority  to  transfer.  Upon  any  registration of transfer, the Company shall
execute  and  deliver the new Financial Advisor's Warrant to the person entitled
thereto.

7.  RESTRICTION  ON  TRANSFER  OF  FINANCIAL  ADVISOR'S WARRANT. The Holder of a
Financial  Advisor's  Warrant  Certificate, by its acceptance thereof, covenants
and  agrees  that  the  Financial  Advisor's  Warrant  is  being  acquired as an
investment  and  not  with  a  view  to  the  distribution thereof, and that the
Financial Advisor's Warrant may not be sold, transferred, assigned, hypothecated
or  otherwise  disposed  of,  in whole or in part, for the term of the Financial
Advisor's  Warrant, except to officers or affiliates of the Financial Advisor or
by  operation  of  law.

8.  EXERCISE  PRICE  AND  NUMBER  OF SECURITIES. Except as otherwise provided in
Section  11  hereof, each Financial Advisor's Warrant is exercisable to purchase
one share of Common Stock at an initial exercise price equal to the Common Stock
Exercise  Price.  The  Common Stock Exercise Price, and the number of shares for
which  the  Financial  Advisor's Warrant may be exercised shall be the price and
the  number  of  shares  which  shall  result from time to time from any and all
adjustments  in  accordance  with  the  provisions  of  Section  11  hereof.

9.  REGISTRATION  RIGHTS.

     9.1 REGISTRATION UNDER THE SECURITIES ACT OF 1933. Each Financial Advisor's
Warrant  Certificate  and each certificate representing securities issuable upon
exercise of the Financial Advisor's Warrant (collectively, the "Warrant Shares")
shall  bear  the following legend unless (i) such Financial Advisor's Warrant or
Warrant  Shares  are  distributed  to  the  public  pursuant  to  a registration
statement  filed  under  the  Securities Act of 1933, as amended (the "Act"), or
(ii)  the  Company  has  received  an  opinion of counsel, in form and substance
reasonably  satisfactory  to  counsel  for  the  Company,  that  such  legend is
unnecessary  for  any  such  certificate:

THE  FINANCIAL  ADVISOR'S  WARRANT REPRESENTED BY THIS CERTIFICATE AND THE OTHER
SECURITIES  ISSUABLE  UPON  EXERCISE  THEREOF  MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT  TO (I) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933 (THE "ACT"), (II) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY
SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (III)
AN  OPINION  OF  COUNSEL,  IF  SUCH  OPINION SHALL BE REASONABLY SATISFACTORY TO
COUNSEL  FOR  THE  ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.

THE  TRANSFER  OR EXCHANGE OF THE FINANCIAL ADVISOR'S WARRANT REPRESENTED BY THE
CERTIFICATE  IS  RESTRICTED  IN  ACCORDANCE WITH THE FINANCIAL ADVISOR'S WARRANT
AGREEMENT  REFERRED  TO  HEREIN.

     9.2  PIGGYBACK  REGISTRATION.  If,  at  any  time  the  Company proposes to
register  any  of  its securities under the Act (other than in connection with a
merger  or  pursuant  to  Form  S-4 or Form S-8), it will give written notice by
registered  mail,  at  least  twenty  (20) days prior to the filing of each such
registration  statement,  to  the  Holders  of  the Financial Advisor's Warrants
and/or  the  Warrant  Shares of its intention to do so. If any of the Holders of
the Financial Advisor's Warrants and/or Warrant Shares notify the Company within
ten (10) days after mailing of any such notice of its or their desire to include
any  such  securities in such proposed registration statement, the Company shall
afford  such  Holders  of the Financial Advisor's Warrants and/or Warrant Shares
the  opportunity  to  have  any such Financial Advisor's Warrants and/or Warrant
Shares  registered  under  such  registration  statement.  In the event that the
managing  underwriter  for  said offering advises the Company in writing that in
its  opinion  the  number  of  securities  requested  to  be  included  in  such
registration  exceeds  the  number  which  can  be sold in such offering without
causing  a diminution in the offering price or otherwise adversely affecting the
offering,  the  Company  will  include  in  such  registration  (a)  FIRST,  the
securities  the Company proposes to sell, (b) SECOND, the securities held by the
entities  that  made  the  demand  for  registration,  (c)  THIRD, the Financial
Advisor's  Warrants  and/or  Warrant  Shares  requested  to  be included in such
registration  which  in  the  opinion  of such underwriter can be sold, PRO RATA
among  the  Holders of Financial Advisor's Warrants and/or Warrant Shares on the
basis  of  the  number  of  Financial  Advisor's  Warrants and/or Warrant Shares
requested  to  be  registered  by such Holders, and (d) FOURTH, other securities
requested  to  be  included  in  such  registration.

Notwithstanding  the  provisions of this Section 9.2, the Company shall have the
right  at  any  time  after  it shall have given written notice pursuant to this
Section 9.2 (irrespective of whether a written request for inclusion of any such
securities  shall  have  been  made)  to  elect  not  to  file any such proposed
registration statement or to withdraw the same after the filing but prior to the
effective  date  thereof.

     9.3  DEMAND  REGISTRATION.

          (a)  At any time after the Engagement Date and expiring five (5) years
     after  the Engagement Date, the Holders of the Financial Advisor's Warrants
     and/or  Warrant Shares representing a "Majority" (as hereinafter defined in
     Section  9.4(k)  hereof) of the Financial Advisor's Warrants and/or Warrant
     Shares shall have the right (which right is in addition to the registration
     rights  under  Section  9.2  hereof),  exercisable by written notice to the
     Company,  to  have  the  Company  prepare  and file with the Securities and
     Exchange  Commission  (the  "Commission"),  on one occasion, a registration
     statement  and  such  other  documents,  including  a prospectus, as may be
     necessary  in  the  opinion of both counsel for the Company and counsel for
     the  Holders,  in  order to comply with the provisions of the Act, so as to
     permit  a public offering and sale by such Holders and any other Holders of
     the  Financial  Advisor's  Warrant  and/or  Warrant  Shares  who notify the
     Company  within  fifteen  (15)  days after the Company mails notice of such
     request  pursuant  to  Section 9.3(b) hereof (collectively, the "Requesting
     Holders") of their respective Warrant Shares for the earlier of (i) six (6)
     consecutive  months  or  (ii)  until  the sale of all of the Warrant Shares
     requested  to  be  registered  by  the  Requesting  Holders.

          (b)  The  Company  covenants  and agrees to give written notice of any
     registration  request  under  this  Section  9.3  by  any Holder or Holders
     representing  a Majority of the Financial Advisor's Warrants and/or Warrant
     Shares  to all other registered Holders of the Financial Advisor's Warrants
     and the Warrant Shares within ten (10) days from the date of the receipt of
     any  such  registration  request.

          (c)  Intentionally  Omitted.

          (d)  Notwithstanding anything to the contrary contained herein, if the
     Company  shall  not  have  filed  a  registration statement for the Warrant
     Shares  within  the time period specified in Section 9.4(a) hereof pursuant
     to  the  written  notice  specified  in  Section 9.3(a) of the Holders of a
     Majority  of  the  Financial  Advisor's Warrants and/or Warrant Shares, the
     Company,  at  its  option, may repurchase (i) any and all Warrant Shares at
     the  higher of the Market Price (as defined in Section 9.3(e)) per share of
     Common  Stock on (x) the date of the notice sent pursuant to Section 9.3(a)
     or  (y)  the  expiration of the period specified in Section 9.4(a) and (ii)
     any  and  all  Financial  Advisor's  Warrant  at such Market Price less the
     exercise  price  of such Financial Advisor's Warrant. Such repurchase shall
     be in immediately available funds and shall close within two (2) days after
     the  later  of (i) the expiration of the period specified in Section 9.4(a)
     or  (ii)  the  delivery of the written notice of election specified in this
     Section  9.3(d).

          (e)  DEFINITION  OF  MARKET  PRICE. As used herein, the phrase "Market
     Price" at any date shall mean the fair value as determined in good faith by
     the  Company's  Board  of  Directors;  provided,  however, that where there
     exists  a  public  market  for  the  Company's  Common Stock at the time of
     Financial Advisor's exercise of this conversion right, the Market Price per
     share of Common Stock shall be deemed to be the last reported sale price of
     the Common Stock on the trading day before the Financial Advisor's Warrant,
     with attached Notice of Conversion, are duly surrendered to the Company for
     conversion  thereof  or,  in case no such reported sale takes place on such
     day,  the  average  of  the  last reported closing sale prices for the last
     three  (3)  trading  days,  in  either  case  as officially reported by the
     principal  securities  exchange  on  which  the  Common  Stock is listed or
     admitted  to  trading, or, if the Common Stock is not listed or admitted to
     trading on any national securities exchange, the average closing sale price
     as  furnished  by the NASD through The NASDAQ Stock Market, Inc. ("NASDAQ")
     or  similar organization if NASDAQ is no longer-reporting such information,
     or if the Common Stock is not quoted on NASDAQ, the OTC Electronic Bulletin
     Board,  or  as  determined  in  good  faith  by  resolution of the Board of
     Directors  of  the  Company, based on the best information available to it.

     9.4  COVENANTS  OF  THE COMPANY WITH RESPECT TO REGISTRATION. In connection
with  any  registration  under Sections 9.2 or 9.3 hereof, the Company covenants
and  agrees  as  follows:

     (a) The Company shall use its best efforts to file a registration statement
within  sixty  (60)  days  of  receipt  of  any demand therefor, and to have any
registration  statements  declared  effective at the earliest possible time, and
shall  furnish  each  Holder  desiring  to  sell  Warrant  Shares such number of
prospectuses  as  shall  reasonably  be  requested.

     (b)  The  Company  shall  pay  all  costs  (excluding  fees and expenses of
Holder(s)  counsel  and  any  underwriting  or  selling  commissions),  fees and
expenses  in  connection  with  all  registration  statements  filed pursuant to
Sections  9.2  and  9.3(a)  hereof  including, without limitation, the Company's
legal  and  accounting  fees, printing expenses, blue sky fees and expenses. The
Holder(s) will pay all costs, fees and expenses (including those of the Company)
in  connection with the registration statement filed pursuant to Section 9.3(c).

     (c)  The  Company  will  take all necessary action which may be required in
qualifying  or  registering  the  Warrant  Shares  included  in  a  registration
statement  for  offering  and sale under the securities or blue sky laws of such
states  as  reasonably are requested by the Holder(s), provided that the Company
shall  not  be  obligated  to  execute or file any general consent to service of
process  or to qualify as a foreign corporation to do business under the laws of
any  such  jurisdiction.

     (d)  The  Company shall indemnify the Holder(s) of the Warrant Shares to be
sold  pursuant  to  any  registration  statement  and  each  person, if any, who
controls  such  Holders  within  the meaning of Section 15 of the Act or Section
20(a)  of  the  Securities  Exchange  Act  of 1934, as amended ("Exchange Act"),
against  all  loss,  claim, damage, expense or liability (including all expenses
reasonably  incurred  in investigating, preparing or defending against any claim
whatsoever)  to which any of them may become subject under the Act, the Exchange
Act  or otherwise, arising from such registration statement but only to the same
extent  and with the same effect as the provisions pursuant to which the Company
has  agreed  to indemnify each of the Underwriters contained in Section 7 of the
Engagement  Agreement.

     (e)  Intentionally  Omitted

     (f) Nothing contained in this Agreement shall be construed as requiring the
Holder(s)  to  exercise  their  Financial Advisor's Warrant prior to the initial
filing  of  any  registration  statement  or  the  effectiveness  thereof.

     (g) The Company shall not permit the inclusion of any securities other than
the  Warrant  Shares to be included in any registration statement filed pursuant
to  Section  9.3  hereof,  or  permit  any other registration statement to be or
remain  effective  during  the  effectiveness  of a registration statement filed
pursuant  to  Section  9.3 hereof, without the prior written consent of National
Securities  Corporation  or  as  otherwise required by the terms of any existing
registration  rights  granted prior to the date of this Agreement by the Company
to  the  holders  of  any  of  the  Company's  securities.

     (h) For purposes of this Agreement, the term "Majority" in reference to the
Financial  Advisor's  Warrants or Warrant Shares, shall mean in excess of 50,000
of  the  then  outstanding  Financial  Advisor's  Warrants  or  Warrant  Shares.

10. OBLIGATIONS OF HOLDERS. It shall be a condition precedent to the obligations
of  the Company to take any action pursuant to SECTION 9 hereof that each of the
selling  Holders  shall:

     (a)  Furnish  to  the  Company  such  information regarding themselves, the
Warrant Shares held by them, the intended method of sale or other disposition of
such securities, the identity of and compensation to be paid to any underwriters
proposed  to  be employed in connection with such sale or other disposition, and
such  other information as may reasonably be required to effect the registration
of  their  Warrant  Shares.

     (b)  Notify  the  Company,  at  any  time when a prospectus relating to the
Warrant  Shares  covered by a registration statement is required to be delivered
under the Act, of the happening of any event with respect to such selling Holder
as  a result of which the prospectus included in such registration statement, as
then  in  effect,  includes  an  untrue statement of a material fact or omits to
state  a  material  fact  required to be stated therein or necessary to make the
statements  therein  not  misleading  in  the  light  of  the circumstances then
existing.

     (c)  The  Holder(s)  of  the  Warrant  Shares  to  be  sold  pursuant  to a
registration  statement,  and their successors and assigns, shall severally, and
not  jointly, indemnify the Company, its officers and directors and each person,
if  any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, against all loss, claim, damage or expense or
liability  (including  all  expenses  reasonably  incurred  in  investigating,
preparing  or  defending  against any claim whatsoever) to which they may become
subject  under  the Act, the Exchange Act or otherwise, arising from information
furnished  by  or on behalf of such Holders, or their successors or assigns, for
specific  inclusion  in  such registration statement to the same extent and with
the  same  effect  as  the  provisions  contained in Section 7 of the Engagement
Agreement  pursuant  to  which  the  Underwriters  have  agreed to indemnify the
Company.

11.  ADJUSTMENTS TO COMMON STOCK EXERCISE PRICE. The Common Stock Exercise Price
in effect at any time shall be subject to adjustment from time to time only upon
the  happening  of  the  following  events:

     11.1 STOCK DIVIDEND, SUBDIVISION AND COMBINATION. In case the Company shall
(i)  declare  a  dividend  or  make  a distribution on its outstanding shares of
Common  Stock  in  shares  of  Common  Stock,  (ii)  subdivide or reclassify its
outstanding  shares  of  Common  Stock into a greater number of shares, or (iii)
combine  or  reclassify  its  outstanding  shares of Common Stock into a smaller
number  of  shares, the Common Stock Exercise Price in effect at the time of the
record  date  for such dividend or distribution or of the effective date of such
subdivision,  combination or reclassification shall be adjusted so that it shall
equal  the  price determined by multiplying the Common Stock Exercise Price by a
fraction, the denominator of which shall be the number of shares of Common Stock
outstanding after giving effect to such action, and the numerator of which shall
be  the  number  of shares of Common Stock outstanding immediately prior to such
action.  Such  adjustment  shall  be made successively whenever any event listed
above  shall  occur.

    11.2    DILUTIVE  ISSUANCES.  In  the event the Company issues any shares of
Common  Stock  (or Common Stock equivalents) during the period from February 12,
2003 until a Financial Advisor's Warrant is exercised, the Company shall compute
the weighted average issuance price for all issuances during the period, and, if
the  weighted  average  issuance price shall be less than $3.10, then the Common
Stock  Exercise Price shall, for that exercise, be equal to the weighted average
issuance  price  for  the  period.

    11.3  Intentionally  Omitted

    11.4  DEFINITION  OF  COMMON STOCK.  For  the purpose of this Agreement, the
term "Common Stock" shall mean (i) the class of stock designated as Common Stock
in  the  Articles  of  Incorporation  of  the  Company as amended as of the date
hereof,  or  (ii)  any other class of stock resulting from successive changes or
reclassifications  of  such  Common  Stock  consisting  solely of changes in par
value,  or  from  par  value to no par value, or from no par value to par value.

    11.5 MERGER  OR  CONSOLIDATION.  In case of any consolidation of the Company
with,  or  merger  of  the  Company  into,  another  corporation  (other  than a
consolidation  or merger which does not result in any reclassification or change
of  the  outstanding Common Stock), the corporation formed by such consolidation
or  merger  shall  execute  and  deliver  to  the  Holder a supplemental warrant
agreement  providing  that  the  Holder of each Financial Advisor's Warrant then
outstanding  or  to  be  outstanding  shall have the right thereafter (until the
expiration  of  such  Financial  Advisor's Warrant) to receive, upon exercise of
such  Financial  Advisor's  Warrant,  the kind and amount of shares of stock and
other  securities and property receivable upon such consolidation or merger by a
holder  of  the  number  of  shares  of  Common  Stock  for which such Financial
Advisor's  Warrant  might  have  been  exercised  immediately  prior  to  such
consolidation  or merger.  Such supplemental warrant agreement shall provide for
adjustments which shall be identical to the adjustments provided in this Section
11.  The  above provision of this subsection shall similarly apply to successive
consolidations  or  mergers.

    11.6  NO ADJUSTMENT OF EXERCISE PRICE IN CERTAIN CASES. No adjustment of the
Common  Stock  Exercise  Price  shall  be  made:

          (a)  Upon  the  issuance or sale of the Financial Advisor's Warrant or
     the  Warrant  Shares;

          (b)  Upon  the  issuance  or sale of Common Stock (or any other Common
     Stock  equivalent)  upon  the  direct  or indirect conversion, exercise, or
     exchange  of  any  options,  rights,  warrants,  or  other  securities  or
     indebtedness of the Company outstanding as of the date of this Agreement or
     granted pursuant to any stock option plan of the Company in existence as of
     the  date  of  this  Agreement,  pursuant  to  the  terms  thereof;  or

          (c)  If  the  amount  of  said adjustment shall be less than two cents
     ($0.02) per share, provided, however, that in such case any adjustment that
     would  otherwise  be  required then to be made shall be carried forward and
     shall  be  made  at  the  time  of  and  together  with the next subsequent
     adjustment  which,  together  with any adjustment so carried forward, shall
     amount  to  at  least  two  cents  ($0.02) per Financial Advisor's Warrant.

12.  EXCHANGE  AND REPLACEMENT OF FINANCIAL ADVISOR'S WARRANT CERTIFICATES. Each
Financial  Advisor's  Warrant Certificate is exchangeable, without expense, upon
the surrender thereof by the registered Holder at the principal executive office
of  the  Company for a new Financial Advisor's Warrant Certificate of like tenor
and  date representing in the aggregate the right to purchase the same number of
Warrant  Shares  in  such  denominations  as  shall  be designated by the Holder
thereof  at  the  time  of  such  surrender.

Upon  receipt  by  the  Company of evidence reasonably satisfactory to it of the
loss,  theft,  destruction  or  mutilation  of  any  Financial Advisor's Warrant
Certificate,  and,  in  case  of  loss,  theft  or  destruction, of indemnity or
security  reasonably  satisfactory to it and reimbursement to the Company of all
reasonable  expenses  incidental thereto, and upon surrender and cancellation of
the Financial Advisor's Warrant, if mutilated, the Company will make and deliver
a  new  Warrant  Certificate  of  like  tenor,  in  lieu  thereof.

13.  ELIMINATION  OF  FRACTIONAL INTERESTS. The Company shall not be required to
issue  certificates  representing  fractions  of shares of Common Stock upon the
exercise  of  the Financial Advisor's Warrant, nor shall it be required to issue
scrip  or  pay  cash in lieu of fractional interests, it being the intent of the
parties  that  all  fractional  interests  shall  be  eliminated by rounding any
fraction  up  to  the  nearest  whole  number of shares of Common Stock or other
securities,  properties  or  rights.

14.  RESERVATION  AND  LISTING  OF  SECURITIES.  The  Company shall at all times
reserve  and keep available out of its authorized shares of Common Stock, solely
for  the  purpose  of  issuance  upon  the  exercise  of the Financial Advisor's
Warrant,  such  number of shares of Common Stock or other securities, properties
or  rights as shall be issuable upon the exercise thereof. The Company will keep
a  copy of this Agreement on file with every Transfer Agent for the Common Stock
and  other securities of the Company issuable upon the exercise of the Financial
Advisor's  Warrant.  The Company will supply every such Transfer Agent with duly
executed  stock  and  other  certificates, as appropriate, for such purpose. The
Company  covenants  and  agrees  that,  upon exercise of the Financial Advisor's
Warrant  and  payment of the Common Stock Exercise Price therefor, all shares of
Common  Stock and other securities issuable upon such exercise shall be duly and
validly  issued,  fully  paid,  non-assessable and not subject to the preemptive
rights  of  any stockholder. As long as the Financial Advisor's Warrant shall be
outstanding,  the  Company  shall  use  its  best efforts to cause all shares of
Common Stock issuable upon the exercise of the Financial Advisor's Warrant to be
listed  (subject  to official notice of issuance) on all securities exchanges on
which  the  Common Stock issued to the public in connection herewith may then be
listed  and/or  quoted  on  Nasdaq  or  the  OTC  Electronic  Bulletin  Board.

15.  NOTICES  TO  FINANCIAL ADVISOR'S WARRANT HOLDERS. Nothing contained in this
Agreement shall be construed as conferring upon the Holders the right to vote or
to  consent  or to receive notice as a stockholder in respect of any meetings of
stockholders for the election of directors or any other matter, or as having any
rights  whatsoever  as  a  stockholder  of the Company. If, however, at any time
prior  to the expiration of the Financial Advisor's Warrants and their exercise,
any  of  the  following  event  shall  occur:

     (a)  the Company shall take a record of the holders of its shares of Common
Stock  for  the  purpose of entitling them to receive a dividend or distribution
payable  otherwise  than  in  cash,  or  a cash dividend or distribution payable
otherwise  than  out  of  current  or  retained  earnings,  as  indicated by the
accounting  treatment  of  such  dividend  or  distribution  on the books of the
Company;  or

     (b)  the  Company  shall  offer  to all the holders of its Common Stock any
additional shares of capital stock of the Company or securities convertible into
or exchangeable for shares of capital stock of the Company, or any option, right
or  warrant  to  subscribe  therefor;  or

     (c)  a dissolution, liquidation or winding up of the Company (other than in
connection with a consolidation or merger) or a sale of all or substantially all
of  its  property, assets and business as an entirety shall be proposed; then in
any  one  or  more of said events, the Company shall give written notice of such
event at least fifteen (15) days prior to the date fixed as a record date or the
date  of  closing  the  transfer books for the determination of the stockholders
entitled  to such dividend, distribution, convertible or exchangeable securities
or  subscription  rights,  or  entitled  to  vote  on such proposed dissolution,
liquidation,  winding  up or sale. Such notice shall specify such record date or
the date of closing the transfer books, as the case may be. Failure to give such
notice  or  any defect therein shall not affect the validity of any action taken
in  connection  with  the  declaration  or  payment of any such dividend, or the
issuance  of any convertible or exchangeable securities, or subscription rights,
options  or  warrants,  or  any proposed dissolution, liquidation, winding up or
sale.

16.  NOTICES. All notices, requests, consents and other communications hereunder
shall  be  in  writing  and shall be deemed to have been duly made and sent when
delivered,  mailed by registered or certified mail, return receipt requested, or
received  via  facsimile:

     (a)  if to the registered Holder of the Financial Advisor's Warrant, to the
address  of  such  Holder  as  shown  on  the  books  of  the  Company;  or

     (b)  if  to the Company, to the address set forth in SECTION 4 hereof or to
such  other  address  as  the  Company  may  designate by notice to the Holders.

17.  SUPPLEMENTS;  AMENDMENTS;  ENTIRE  AGREEMENT. This Agreement (including the
Engagement  Agreement  to  the  extent  portions thereof are referred to herein)
contains the entire understanding between the parties hereto with respect to the
subject  matter  hereof  and  may not be modified or amended except by a writing
duly  signed  by  the  party  against  whom  enforcement  of the modification or
amendment is sought. The Company and the Financial Advisor may from time to time
supplement  or  amend  this  Agreement  without  the  approval of any holders of
Financial  Advisor's  Warrant Certificates (other than the Financial Advisor) in
order  to  cure  any ambiguity, to correct or supplement any provision contained
herein  which may be defective or inconsistent with any provisions herein, or to
make  any  other  provisions in regard to matters or questions arising hereunder
which  the Company and the Financial Advisor may deem necessary or desirable and
which  the Company and the Financial Advisor deem shall not adversely affect the
interests  of  the  Holders  of  Financial  Advisor's  Warrant  Certificates.

18.  SUCCESSORS.  All of the covenants and provisions of this Agreement shall be
binding  upon  and  inure  to  the benefit of the Company, the Holders and their
respective  successors  and  assigns  hereunder.

19.  SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All statements in any schedule,
exhibit  or  certificate  or  other  instrument delivered by or on behalf of the
parties  hereto,  or  in  connection  with the transactions contemplated by this
Agreement,  shall  be  deemed  to  be  representations and warranties hereunder.
Notwithstanding  any  investigations made by or on behalf of the parties to this
Agreement, all representations, warranties and agreements made by the parties to
this  Agreement  or  pursuant  hereto  shall  survive.

20.  GOVERNING  LAW.  This  Agreement  and  each  Financial  Advisor's  Warrant
Certificate  issued  hereunder  shall  be deemed to be a contract made under the
laws  of  the  State  of  New  York  and  for all purposes shall be construed in
accordance  with  the  laws  of said State without giving effect to the rules of
said  State  governing  the  conflicts  of  laws.

21. SEVERABILITY. If any provision of this Agreement shall be held to be invalid
or unenforceable, such invalidity or unenforceability shall not affect any other
provision  of  this  Agreement.

22.  CAPTIONS.  The  caption  headings of the Sections of this Agreement are for
convenience of reference only and are not intended, nor should they be construed
as,  a  part  of  this  Agreement  and  shall  be  given  no substantive effect.

23.  BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be construed to
give  to  any  person  or  corporation  other than the Company and the Financial
Advisor  and  any  other registered Holder(s) of the Financial Advisor's Warrant
Certificates  or  Warrant  Shares  any legal or equitable right, remedy or claim
under  this  Agreement;  and  this Agreement shall be for the sole and exclusive
benefit  of  the  Company  and  the  Underwriters and any other Holder(s) of the
Financial  Advisor's  Warrant  Certificates  or  Warrant  Shares.

24.  COUNTERPARTS.  This Agreement may be executed in any number of counterparts
and  each  of  such  counterparts  shall  for  all  purposes  be deemed to be an
original,  and  such counterparts shall together constitute but one and the same
instrument.

IN  WITNESS  WHEREOF,  the  parties hereto have caused this Agreement to be duly
executed,  as  of  the  day  and  year  first  above  written.

ATTEST:                                        THE  LEATHER  FACTORY,  INC.
By:  /s/  Ronald  C.  Morgan                    By:  /s/  Shannon  L.  Greene
    ------------------------                        -------------------------
     Name:     Mr.  Ronald  Morgan               Name:  Ms.  Shannon  Greene
     Title:    President                         Title:  CFO



                                           WESTMINSTER  SECURITIES  CORPORATION
                                           By:  /s/  John  O'Shea
                                                -----------------
                                                Name:  John  O'Shea
                                                Title:     President

                                   ***********
                                       22
<PAGE>
EXHIBIT  A

                [FORM OF FINANCIAL ADVISOR'S WARRANT CERTIFICATE]

     THE  FINANCIAL  ADVISOR'S  WARRANT  REPRESENTED BY THIS CERTIFICATE AND THE
OTHER  SECURITIES  ISSUABLE  UPON  EXERCISE  THEREOF  MAY NOT BE OFFERED OR SOLD
EXCEPT  PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT  OF 1933 (THE "ACT"), (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT
(OR  ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES),
OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY
TO COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.

THE  TRANSFER OR EXCHANGE OF THE FINANCIAL ADVISOR'S WARRANT REPRESENTED BY THIS
CERTIFICATE  IS  RESTRICTED  IN  ACCORDANCE WITH THE FINANCIAL ADVISOR'S WARRANT
AGREEMENT  REFERRED  TO  HEREIN.

                            EXERCISABLE ON OR BEFORE
                5:00 P.M., NEW YORK TIME BEFORE FEBRUARY 12, 2008
                         Financial Advisor's Warrant No.
                                  Issuable for
                         100,000 Shares of Common Stock

                               WARRANT CERTIFICATE
     This Warrant Certificate certifies that Westminster Securities Corporation,
a  New  York  corporation,  is  the  registered  holder  of Warrants to purchase
initially at any time from February  12, 2003 until 5:00 p.m., New York time on,
February 12, 2008  ("Expiration Date"), up to 100,000 shares of Common Stock, no
par  value  per share, of the Company (the "Common Stock"), at an exercise price
of  $3.10  per share (the "Common Stock Exercise Price"), upon surrender of this
Financial Advisor's Warrant Certificate and payment of the Common Stock Exercise
Price  at  an office or agency of the Company, but subject to the conditions set
forth  herein  and  in  the  Financial  Advisor's  Warrant Agreement dated as of
February  12, 2003 among the Company and Westminster Securities Corporation (the
"Warrant  Agreement").  Payment  of  the  Exercise Price shall be made either by
certified or official bank check in New York Clearing House funds payable to the
order  of  the  Company  or  by  surrender of the Financial Advisor's Warrant as
provided  in  the  Warrant  Agreement.

No  Warrant  may  be exercised after 5:00 p.m., New York time, on the Expiration
Date,  at  which  time  all Financial Advisor's Warrant evidenced hereby, unless
exercised  prior  thereto,  shall  thereafter  be  void.

The Financial Advisor's Warrant evidenced by this Warrant Certificate is part of
a  duly  authorized issue of Financial Advisor's Warrants issued pursuant to the
Warrant  Agreement,  which Warrant Agreement is hereby incorporated by reference
in  and  made  a  part  of  this  instrument  and  is  hereby  referred to for a
description  of  the  rights,  limitation  of  rights,  obligations,  duties and
immunities  thereunder  of  the  Company and the holders (the words "holders" or
"holder"  meaning  the registered holders or registered holder) of the Financial
Advisor's  Warrant.

The  Warrant  Agreement  provides that upon the occurrence of certain events the
Exercise  Price  and the type and/or number of the Company's securities issuable
thereupon  may,  subject to certain conditions, be adjusted.  In such event, the
Company  will,  at  the  request  of the holder, issue a new Warrant Certificate
evidencing  the  adjustment  in the Exercise Price and the number and/or type of
securities  issuable  upon  the  exercise  of  the  Financial Advisor's Warrant;
provided,  however,  that  the  failure of the Company to issue such new Warrant
Certificates  shall not in any way change, alter or otherwise impair, the rights
of  the  holder  as  set  forth  in  the  Warrant  Agreement.

Upon due presentment for registration of transfer of this Warrant Certificate at
an  office  or  agency  of  the  Company,  a  new Warrant Certificate or Warrant
Certificates  of  like  tenor  and  evidencing in the aggregate a like number of
Financial  Advisor's  Warrant shall be issued to the transferees in exchange for
this  Warrant Certificate, subject to the limitations provided herein and in the
Warrant  Agreement,  without any charge except for any tax or other governmental
charge  imposed  in  connection  with  such  transfer.

Upon  the exercise of less than all of the Financial Advisor's Warrant evidenced
by  this  Certificate,  the Company shall forthwith issue to the holder hereof a
new  Warrant  Certificate  representing  such  unexercised  Financial  Advisor's
Warrant.

In  addition to the right of exercise, the holder shall have the right to make a
cashless  exercise of this Warrant Certificate (in whole but not in part) by the
surrender  of  this  Warrant  Certificate (with the attached Form of Election to
Convert)  at  the  office of the Company at any time during the duration of this
Warrant,  into  shares  of  Common  Stock, as provided in the Warrant Agreement.
The  Company  may deem and treat the registered holder(s) hereof as the absolute
owner(s)  of this Warrant Certificate (notwithstanding any notation of ownership
or other writing hereon made by anyone), for the purpose of any exercise hereof,
and of any distribution to the holder(s) hereof, and for all other purposes, and
the  Company  shall  not  be  affected  by  any  notice  to  the  contrary.

All  terms  used  in  this  Warrant Certificate which are defined in the Warrant
Agreement  shall  have  the  meanings assigned to them in the Warrant Agreement.
This  Warrant  Certificate  does  not  entitle  any holder thereof to any of the
rights  of  a  shareholder  of  the  Company.

IN  WITNESS  WHEREOF, the Company has caused this Warrant Certificate to be duly
executed.

Dated  as  of  February  27,  2003.

ATTEST:                                 THE  LEATHER  FACTORY,  INC.

By:___________________________          By:_______________________________
     Name:                              Name:  Ms.  Shannon  Greene
     Title:                             Title:   CFO
                                       23
<PAGE>

             [FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 4.1]

     The  undersigned  hereby  irrevocably  elects  to  exercise  the  right,
represented  by  this  Warrant  Certificate, to purchase ______ shares of Common
Stock,  and  herewith  tenders  in  payment  for  such securities a certified or
official bank check payable in New York Clearing House Funds to the order of The
Leather  Factory,  Inc.  (the  "Company")  in  the  amount of $_________, all in
accordance  with  the  terms  of  Section 4.1 of the Financial Advisor's Warrant
Agreement  dated  as  of  February  12,  2003  among the Company and Westminster
Securities  Corporation.  The  undersigned  requests that a certificate for such
securities  be  registered in the name of ____________________, whose address is
__________________  and  that  such  certificate  to  be  delivered
to____________________  whose  address  is  _______________________, and if said
number  of  shares shall not be all the shares purchasable hereunder, that a new
Warrant  Certificate for the balance of  the shares purchasable under the within
Warrant  Certificate be registered in the name of the undersigned warrant holder
or  his  assignee  as below indicated and delivered to the address stated below.

Dated:_____________________________

Signature:____________________________
     (Signature  must  conform  in  all
respects  to  name  of  holder  as  specified
on  the  face  of  the  Warrant  Certificate.)

Address:     ______________________________
             ______________________________

______________________________________
(Insert  Social  Security  or  Other  Identifying
Number  of  Holder)

                                       24
<PAGE>

                              [FORM OF ASSIGNMENT]

(TO BE EXECUTED BY THE REGISTERED HOLDER IF SUCH HOLDER DESIRES TO TRANSFER THE
                              WARRANT CERTIFICATE.)

FOR  VALUE  RECEIVED  ________________  hereby sells, assigns and transfers unto
(NAME  OF  TRANSFEREE)  this Warrant Certificate, together with all right, title
and  interest  therein,  and  does  hereby  irrevocably  constitute  and appoint
________________,  attorney,  to  transfer the within Warrant Certificate on the
books  of  the  within-named  Company,  with  full  power  of  substitution.

Dated:_____________________

Signature:______________________________
(Signature  must  conform  in  all  respects
to  name  of  holder  as  specified  on  the
face  of  the  Warrant  Certificate.)

Address:     ______________________________
             ______________________________

______________________________________
(Insert  Social  Security  or  Other  Identifying
Number  of  Holder)

Signature  Guaranteed:________________________________________________________
(Signature  must  be  guaranteed  by  a  bank  savings  and  loan  association,
stockbroker,  or  credit union with membership in an approved signature guaranty
Medallion  Program  pursuant  to  Securities  Exchange  Act  Rule  17Ad-15.)


                                       25
<PAGE>

      [FORM OF ELECTION TO MAKE CASHLESS EXERCISE PURSUANT TO SECTION 4.2]

     The  undersigned  hereby  irrevocably  elects  to  exercise  the  right,
represented  by  this  Warrant Certificate, to exercise this Warrant Certificate
for  ________  shares of Common Stock (assuming a Market Price calculated on the
basis of the last sale price for Common Stock on _________________, (the trading
day  immediately preceding surrender of the Warrant Certificate and this Form of
Election  to  Make  Cashless  Exercise)  of  $_________), all in accordance with
Section  4.2  of  the  Financial  Advisor's  Warrant  Agreement  dated  as  of
February  12,  2003  between the Company and Westminster Securities Corporation.
The undersigned requests that a certificate for such securities be registered in
the  name of ________________________, whose address is ________________________
and  ________________________(attach  separate  sheet  if  necessary).



Dated:________________________


Signature:_____________________________
(Signature  must  conform  in  all
respects  to  name  of  holder  as  specified
on  the  face  of  the  Warrant  Certificate.)

Address:_______________________________
        _______________________________

______________________________________
(Insert  Social  Security  or  Other  Identifying
Number  of  Holder)

                                       26
<PAGE>

EXHIBIT  4.2


                       WESTMINSTER SECURITIES CORPORATION
                         MEMBER NEW YORK STOCK EXCHANGE
                         ------------------------------

February  12,  2003

Ms.  Shannon  L.  Greene
Chief  Financial  Officer
The  Leather  Factory,  Inc.
3827  East  Loop  820  South
Fort  Worth,  TX  76119

RE:  CAPITAL  MARKETS  SERVICES  ENGAGEMENT  AGREEMENT

Dear  Shannon,

This agreement ("Agreement") is made and entered into this 12th day of February,
2003  between The Leather Factory, Inc., a Delaware corporation (the "Company"),
and  Westminster  Securities  Corporation,  a  registered  broker/dealer
("Westminster").  Pursuant  to this Agreement, Westminster will provide services
to  the  Company  as  set  forth  below:

1.  PURPOSE
-----------
Based  on  the  terms  set  forth  in this Agreement, the Company hereby retains
Westminster  on  an  exclusive  basis  during  the Engagement Period (as defined
herein)  to  provide various capital markets services as set forth herein. It is
understood  and  acknowledged  by  the  parties  that the value of Westminster's
advice  is not measurable in any quantitative manner, and that Westminster shall
not  be  obligated  to  spend  any  specific  amount  of  time performing duties
hereunder.

2.  ENGAGEMENT  PERIOD
----------------------
This  Agreement  shall  commence  on March 1, 2003 and terminate on February 29,
2004  (the  "Engagement  Period") unless extended by mutual written agreement of
Westminster and the Company or earlier terminated as provided for in sections 12
or  15  (b)  hereof.

3.  SERVICES
------------
Westminster  may  assist  the  Company by performing the various capital markets
services  ("Capital  Markets  Services  or  Services") that are listed below. In
connection  with  Westminster  providing  such  capital  markets services to the
Company,  the  Company  shall  provide  Westminster  with  any  information that
Westminster  deems appropriate. The Company hereby acknowledges that Westminster
will  be  using and relying on said information without independent verification
and that Westminster assumes no responsibility for the accuracy and completeness
of  any  information  provided  to  it  by the Company.  In performance of these
duties,  Westminster  shall  provide  the  Company  with  the  benefits  of  its
commercially  reasonable  judgement  and  efforts.

     A.  SERVICES
     ------------

     Westminster  will  provide  the  Company with the following Capital Markets
Services:

     (a)  Corporate  Finance  Advisory  Services;
          (1)  Advise  on  financial  forecasting  model(s);
          (2)  Provide  sponsorship  to  investors;
          (3)  Advise  on  investor  communications  and  presentations;
          (4)  Advise  on  shareholder  value  strategy;  and
          (5)  Advise  on  shareholder  base  and  distribution

     (b)  Research Services - Publish and distribute research covering Company's
publicly-traded common shares. (All Investment Recommendations, Risk Ratings and
Target  Prices  included in such coverage to be determined solely by Westminster
Equity  Research  department.)


     (c)  Sales  and  Trading  Services;
          (1)  Advise  and  assist  with  exchange  specialist;
          (2)  Advise  on  and  develop  institutional  sales;
          (3)  Provide  institutional  research  sales  calls;
          (4)  Advise  and  assist on shareholder data base information
                and management;
          (5)  Advise and assist in block share transactions and
                redistributions; and
          (6)  Advise  and  assist  in  restricted  stock  and  ESOP  matters

     B.  COMPENSATION
     ----------------
     Upon  execution  of  this  Agreement, the Company shall pay Westminster and
initial retainer fee of $6000.00 and the following monthly fees on or before the
15th  day  of  each month during the Engagement Period. Should a sale, merger or
other  business  combination of the Company occur, all sums shall be immediately
due  and  payable.  Payment  of  engagement  fees  shall  be  as  follows:

    (1) Capital  Markets  Advisory Services - During the Engagement period,
the  Company  shall  pay  Westminster $4000 on the 15th of each month commencing
March,  2003

     (2) Additionally, the Company shall issue Westminster warrants ("Warrants")
to  purchase  100,000  shares  of  common  stock  of  the Company which shall be
exercisable for a period of five years at an exercise price of $ 3.10 per share.
The  Warrants  shall  contain  customary  terms,  including, but not limited to,
demand  and piggyback registration rights, anti-dilution and a cashless exercise
price.

The  Company  agrees to pay Westminster additional fees for any and all services
performed by Westminster at the request of the Company that are not specifically
included  in the engagement as provided for in Section 3 of this Agreement. Such
additional  fees  shall be customary and mutually agreeable and shall be paid in
full  by  the  Company  on  or  before the 1st day of each month after which the
Company  receives  an  invoice  from  Westminster.

4.  ADDITIONAL  SERVICES
------------------------

Should  the  Company  desire  Westminster  to  provide any service(s) not listed
above,  the  Company  agrees  to pay Westminster additional fees for any and all
Services  performed  by  Westminster  that  are not specifically included in the
Engagement  as  provided  for in Section 3 of this Agreement. Under the terms of
this  Agreement,  the  Company  and  Westminster  shall enter into an additional
engagement  letter  to  be executed by the parties hereto at the commencement of
the  additional  service(s)  to  be  rendered  by  Westminster

Such  additional  fees  shall  be customary and mutually agreeable and shall be
paid  in  full by the Company on or before the 1st day of each month after which
the  Company  receives  an  invoice  from  Westminster.

5.  WESTMINSTER'S  RIGHTS  TO PARTICIPATE IN FUTURE OFFERINGS OF THE COMPANY.
-----------------------------------------------------------------------------

The  Company  hereby  grants  to  Westminster a right of first refusal to act as
placement  agent or managing underwriter, as appropriate, during this engagement
and  in  any  subsequent  private  placement or public offering of the Company's
securities  for  a period of twelve months (12) following the termination of the
Engagement  Period. Westminster shall not be obligated to act as placement agent
or  managing  underwriter  with  respect  to  any  such  transaction.  Any  such
subsequent  public  offering  or  private  placement  shall  be  subject  to  an
additional  engagement  agreement  executed  by  the  parties  hereto  at  the
commencement  of  services  to  be  provided  by  Westminster.

6.   MERGER/ACQUISITION  SERVICES.
----------------------------------

During  the Engagement Period, Westminster shall have the right of first refusal
to  provide  merger/acquisition advisory services to the Company.  Westminster's
role  and specific compensation with respect to the Company's consummation of an
acquisition  of  assets,  merger  or  other  similar  business  combination with
another business (a "Business Combination") or in assisting in an arrangement in
a  different  form  than  as  set  forth  herein,  such as contracts, licensing,
ventures  or  other  business  transaction  (Business  Transactions") during the
Engagement  Period  shall  be set forth in an additional engagement letter to be
executed  by  the  parties  hereto  at  the commencement of services rendered by
Westminster for the Business Combination or Business Transaction. If the Company
consummates a Business Combination or Business Transaction during the Engagement
Period, then Westminster shall receive mutually agreed upon fees and other forms
of  compensation  as  are  customarily received by investment bankers in similar
transactions.  This  may  include  fees  for such Business Combination, Business
Transactions,  financing  fees  and/or  fees  for  fairness  opinion.

7.  EXPENSES.
-------------

The Company shall reimburse Westminster for any and all reasonable out-of-pocket
expenses incurred in connection with services provided to the Company under this
Agreement  including, but not limited to travel, legal fees, printing, and other
expenses,  incurred  in  connection  with  Westminster's  providing the services
stated  or  contemplated  herein. Westminster will not bear any of the Company's
legal, accounting, printing or other expenses in connection with any transaction
considered  or  consummated  hereby.  It  also  is  understood  that  neither
Westminster,  nor  the  directors,  employees and agents of Westminster, will be
responsible  for  any  fees or commissions payable to any finder or to any other
financial  or  other  advisor  utilized  or  retained  by  the Company. With the
exception  of  out  of  pocket expenses, Westminster shall obtain prior approval
from  the  Company.  All  expenses  billed by Westminster to the Company will be
invoice  to  the  Company  and  reimbursed on a monthly basis within ten days of
receipt.  Upon  execution  of  this Agreement, the Company will deposit $2000.00
with  Westminster  as  a  deposit  for  out  of  pocket  expenses.

8.  RELATIONSHIPS  WITH  OTHERS;  CONFIDENTIAL  INFORMATION.
------------------------------------------------------------

Westminster  may  utilize  the  fact  of  its  engagement  hereunder in a normal
tombstone  advertising,  news  release  or  in accordance with standard industry
practice.

The  Company acknowledges that Westminster or its affiliates are in the business
of  providing  investment banking, financial advisory and consulting services to
others.  Nothing  contained  herein  shall  be  construed  to  limit or restrict
Westminster  in conducting such business with respect to others, or in rendering
such  advice  to others. In connection with the rendering of services hereunder,
Westminster  has  been  or  will  be  furnished  with  confidential  information
concerning  the  Company including, but not limited to, financial statements and
information,  cost  and  expense data, production data, trade secrets, marketing
and customer data, and such other information not generally obtained from public
or  published  information  or  trade sources.  Such information shall be deemed
"Confidential  Material"  and, except as specifically provided herein, shall not
be  disclosed  by Westminster (except as used by Westminster to perform services
as contemplated by this Agreement) without prior written consent of the Company.
In  the  event it is required by applicable law or legal process to disclose any
of  the Confidential Material, it is agreed that Westminster will deliver to the
Company  prompt  notice of such requirement prior to disclosure of same so as to
permit the Company an opportunity to seek an appropriate protective order and/or
waive compliance of this provision.  If, in the absence of a protective order or
receipt of written waiver, Westminster is nonetheless, in the written opinion of
its counsel, compelled to disclose any Confidential Material, Westminster may do
so  without  liability  hereunder  provided  that  notice  of  such  prospective
disclosure  is  delivered  to the Company prior to actual disclosure.  Following
the  termination  of  this  Agreement  and  a  written  request  by the Company,
Westminster shall deliver to the Company all Confidential Material. This Section
shall  survive  the  termination  of  this  Agreement.

9.  LIMITATION  UPON  THE  USE  OF  ADVICE  AND  SERVICES.
----------------------------------------------------------

     (a)     The Company acknowledges that the advice (written or oral) rendered
by Westminster pursuant to this Agreement is intended solely for the benefit and
use  of  the Company in considering the matters to which this agreement relates,
and  the Company agrees that such advice shall not be disclosed publicly or made
available  to  third  parties  without the prior written consent of Westminster.
Westminster  may  utilize  the  fact  of  its engagement hereunder in its normal
tombstone  advertising  or  in  accordance  with standard industry practice.  No
person or entity, other than the Company or any of its subsidiaries or directors
or  officers  of each of the foregoing, shall be entitled to make use of or rely
upon  the  advice  Westminster  to be given hereunder, and the Company shall not
transmit  such  advice  to,  or encourage or facilitate the use or reliance upon
such  advice  by  others  without  the  prior  consent  of  Westminster.

     (b)  Research  reports  that  may  be  prepared  by  research  analysts  at
Westminster will, when and if prepared, be done solely on the merits or judgment
of  the  research  analysts of Westminster including but not limited to ratings,
price  targets  or  other  views  expressed  by  the  research  analyst.


     (c)  Company  hereby  acknowledges  that Westminster, for services rendered
under  this Agreement, makes no commitment whatsoever to make a market in any of
the Company's securities on any stock exchange or in any electronic marketplace.
Any  decision by Westminster to make a market in any of the Company's securities
shall  be  based solely on the independent judgment of Westminster's management,
employees,  and  agents.

     (d)  Use of the Westminster's name in annual reports or any other report of
the  Company  or releases by the Company must have the prior written approval of
Westminster  unless the Company is required by law to include Westminster's name
in  such  annual reports, other report or release of the Company, in which event
Westminster  will  be  furnished  with  copies  of  such annual reports or other
reports  or  releases  using Westminster's name in advance of publication by the
Company,  its  affiliates  or  assigns.

10.  LIMITATION  OF  LIABILITY.
-------------------------------

In  the  absence  of  gross  negligence  or  willful  misconduct  on the part of
Westminster,  Westminster  shall not be liable to the Company or to any officer,
director,  employee,  agent,  representative,  stockholder  or  creditor  of the
Company  for  any  action  or  omission  of  Westminster or any of its officers,
directors,  employees, agents, representatives or stockholders in the course of,
or in connection with, rendering or performing any services contemplated hereby.

11.   INDEMNIFICATION.
----------------------

The Company agrees to indemnify Westminster in accordance with the provisions of
Annex  A  hereto,  which  is  incorporated  by reference and made a part hereof.

12.  TERMINATION.
-----------------
This  Engagement  Letter  may  be  terminated  at any time during the Engagement
Period by Westminster upon five (5) days prior written notice to the Company, in
the  event  that  Westminster becomes aware of (i) any change in the business or
operations  of  the  Company which Westminster reasonably believes may adversely
affect Westminster's ability to render the services contemplated hereunder, (ii)
any  misrepresentation  by  the Company with respect to its business operations,
assets,  condition  (financial or otherwise), results of operations or prospects
of the Company, or (iii) any breach by the Company of its obligations under this
Agreement.

Unless  otherwise  provided  for  herein,  in  the event of termination (i) this
Agreement shall become void, without liability on the part of Westminster or its
affiliates,  directors,  officers  or  stockholders,  (ii)  Westminster shall be
entitled  to  retain  or  receive  compensation  for  services  it has rendered,
including  payment  for  expenses  it  has  incurred  up  to  the  date  of such
termination,  or (iii) the Company's indemnification of  Westminster pursuant to
Annex  A  shall  remain  in  full  force  and  effect.

13.   DISCRETION.
-----------------

Nothing contained herein shall require the Company to enter into any transaction
presented  to  it  by Westminster, which decision shall be at the Company's sole
discretion.

14.  SEVERABILITY.
------------------

Any term or provision of this Agreement which is invalid or unenforceable in any
jurisdiction  shall,  as  to  that jurisdiction, be ineffective to the extent of
such  invalidity  or unenforceability without rendering invalid or unenforceable
the  remaining  terms and provisions of this Agreement or affecting the validity
or  enforceability  of  any  of the terms or provisions of this Agreement in any
other  jurisdiction.  If  any  provision  of this Agreement is so broad as to be
unenforceable,  the  provision  shall  be  interpreted to be only so broad as is
enforceable.

15.  MISCELLANEOUS.
-------------------

     (a)  Any  notice  or  communication  between  parties  hereto  shall  be
sufficiently  given if sent by certified or registered mail, postage prepaid, or
faxed  and  confirmed  if  to the Company, addressed to it at 3827 East Loop 820
South, Fort Worth, TX 76119 or if to Westminster, addressed to it at Westminster
Securities  Corporation,  100  Wall  Street, 7th Floor, New York, NY 10005. Such
notice  or  other  communication  shall  be  deemed  to  be given on the date of
receipt.

     (b)  If  Westminster  shall  cease  to  do  business, the provisions hereof
relating  to duties of Westminster and compensation by the Company as it applies
to  Westminster  shall thereupon cease to be in effect, except for the Company's
obligation  of payment for services rendered prior thereto. This Agreement shall
survive  any  merger of, acquisition of, or acquisition by Westminster and after
any  such merger or acquisition shall be binding upon the Company and the entity
surviving  such  merger,  acquisition  or  similar  transaction.

     (c)  This Agreement embodies the entire agreement and understanding between
the  Company  and  Westminster  and  supersedes  any and all negotiations, prior
discussions  and  preliminary and prior agreements and understandings related to
the subject matter hereof, and may be modified only by a written instrument duly
executed  by  each  party.

     (d)  This Agreement has been duly authorized, executed and delivered by and
on  behalf  of  the  Company  and  Westminster.

     (e) This Agreement shall be deemed made in New York. This Agreement and all
controversies arising from or relating to performance under this Agreement shall
be  governed  by  and  construed in accordance with the laws of the State of New
York,  without  giving effect to such state's rules concerning conflicts of law.

     The  Company hereby irrevocably consents to personal jurisdiction and venue
in any court of the State of New York or any Federal court sitting in the County
of New York for the purposes of any suit, action or other proceeding arising our
of  this Agreement or any of the agreements or transactions contemplated hereby,
which is brought by or against the Company, and hereby agrees that all claims in
respect  of any such suit, action or proceeding shall be heard and determined in
any  such  court.  The  Company  hereby  irrevocably  consents to the service of
process  of  any  of  the  aforementioned  courts  in  any  such suit, action or
proceeding  by  the  mailing  of copies thereof by registered or certified mail,
postage  prepaid, to the Company at its address set forth above, such service to
become  effective  ten (10) days after such mailing. Each of the Company (on its
own  behalf  and,  to  the  extent permitted by applicable law, on behalf of its
shareholders)  and  Westminster  hereby  waive  any  right to trial by jury with
respect  to  any  claim,  proceeding, counterclaim or action arising out of this
Agreement then the prevailing party in such action or proceeding, whether or not
the  action  or  proceeding  proceeds  to  final  judgment.

     (f)  There is no relationship of partnership, agency, employment, franchise
or  joint  venture  between the parties. Neither party has the authority to bind
the  other  or  incur  any  obligation  on  its  behalf.

     (g)  The Company hereby acknowledges that Westminster is not a fiduciary of
the  Company  and  that  Westminster  makes  no  representations  or  warranties
regarding  Company's  ability to secure financing, whether now or in the future.

     (h)  This  Agreement and the rights hereunder may not be assigned by either
party  (except  by  operation of law) and shall be binding upon and inure to the
benefit  of  the  parties and their respective permitted successors, assigns and
legal  representatives.

     (i)  No  waiver, amendment or other modification of this Agreement shall be
effective  unless  in  writing and signed by both parties. This Agreement may be
executed  in  counterparts,  each of which together shall be considered a single
document.

     (j)  All  amounts payable to Westminster by the Company hereunder which are
not  paid  with thirty (30) days of the dates payable shall accrue interest at a
rate  of  twelve  (12%)  per  annum  from  the  date  due  until  paid.

If  you  are in agreement with the foregoing, please execute and return one copy
of  this  letter  of  intent to Westminster, along with a check or wire transfer
made  payable  to Westminster Securities Corporation in the amount of $12,000.00
in  accordance  with  paragraphs  three  and  seven  above.

                              Sincerely,

                              WESTMINSTER  SECURITIES  CORPORATION

                              By:  /s/  John  O'Shea
                                 -------------------
                              Name:  John  O'Shea
                              Title:     President

                              By:  /s/  Samuel  M.  Chase  Jr.
                                 -----------------------------
                              Name:      Samuel  M.  Chase  Jr.
                              Title:    Managing  Director


Agreed  to  and  accepted  this  13th  day  of  February  2003.

THE  LEATHER  FACTORY,  INC.

By:  /s/  Shannon  L.  Greene
     ------------------------
Name:     Ms.  Shannon  Greene
Title:  Chief  Financial  Officer

                                       27
<PAGE>

EXHIBIT  99.1


                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
      AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In  connection  with  the  Quarterly Report on Form 10-Q of The Leather Factory,
Inc.  for  the  quarter  ended  March  31,  2003 as filed with the United States
Securities  and  Exchange  Commission  on  the  date hereof (the "Report"), Wray
Thompson,  as  Chairman  and  Chief Executive Officer, and Shannon L. Greene, as
Treasurer  and  Chief  Financial  Officer, each hereby certifies, pursuant to 18
U.S.C.  Section  1350,  as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act  of  2002,  that:

     i.  The  Report  fully  complies  with the requirements of section 13(a) or
15(d)  of  the  Securities  Exchange  Act  of  1934;  and

     ii. The information contained in the Report fully presents, in all material
respects,  the  financial  condition  and  results of operations of the Company.


     May  13,  2003               By:  /s/  Wray  Thompson
                                       -------------------
                                       WRAY  THOMPSON
                                       CHAIRMAN  OF  THE  BOARD  AND
                                         CHIEF EXECUTIVE OFFICER


     May  13,  2003               By:  /s/  Shannon  L.  Greene
                                       ------------------------
                                       SHANNON  L.  GREENE
                                       CHIEF  FINANCIAL OFFICER AND TREASURER