NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK  ISSUABLE UPON EXERCISE HAVE
BEEN  REGISTERED  UNDER  THE  SECURITIES  ACT OF  1933 OR ANY  APPLICABLE  STATE
SECURITIES  LAWS,  AND NO TRANSFER OR  ASSIGNMENT  OF THIS WARRANT OR THE SHARES
ISSUABLE  UPON  ITS  EXERCISE  MAY  BE  MADE  IN  THE  ABSENCE  OF AN  EFFECTIVE
REGISTRATION  STATEMENT  UNDER SUCH LAWS OR THE  AVAILABILITY OF EXEMPTIONS FROM
THE REGISTRATION PROVISIONS THEREOF IN RESPECT OF SUCH TRANSFER OR ASSIGNMENT.


                            THE LEATHER FACTORY, INC.
                             STOCK PURCHASE WARRANT
                 200,000 SHARES COMMON STOCK, $0.0024 PAR VALUE

         This is to certify that, for value received,  Evert I.  Schlinger,  his
successors and registered  assigns,  is entitled upon the due exercise hereof at
any time during the period  commencing on August 3, 1998 and terminating at 5:00
P.M., Central Time, on August 3, 2003 to purchase Two Hundred Thousand (200,000)
shares of the $0.0024 par value Common Stock of The Leather  Factory,  Inc. at a
price per share as  specified  in Section 2 of this  Warrant and to exercise the
other rights, powers and privileges  hereinafter provided,  all on the terms and
subject to the conditions specified herein.

         1. Certain  Definitions.  Unless the context  otherwise  requires,  the
            ---------------------
following terms as used in this Warrant  incorporated by reference  herein shall
have the following meanings:

         Common Stock.  The Company's  $0.0024 par value Common Stock, any stock
         -------------
into which  such stock  shall  have been  changed  or any stock  resulting  from
reclassification of such stock.

         Company.  The Leather Factory, Inc.,  a Delaware  corporation, and  its
         --------
successors and assigns.

         Exercise Price.  The price specified in Section 2 hereof.
         ---------------

         Holder or Warrant Holder. Evert I. Schlinger, an individual residing in
         -------------------------
Santa  Ynez,  California,  and his  successors  and  registered  agents  of this
Warrant.

         2. Exercise  Price.  The Exercise  Price per share shall be $0.4375 for
            ---------------
each share of Common Stock covered by this Warrant.

         3. Exercise. This Warrant may be exercised by the Holder, as to some or
            ---------
all, but not less than 50,000 shares at any one time of exercise,  of the shares
of Common Stock  covered  hereby,  by surrender of this Warrant at the Company's
principal  office at 3847 E. Loop 820 South,  Fort  Worth,  Texas  76119,  Attn:
Corporate  Secretary  (or such  other  address  as the  Company  may  advise the
registered  Holder hereof by notice given by certified or registered mail), with
the form of election to subscribe  attached hereto duly executed and upon tender
of payment to the Company of the Exercise  Price for shares so purchased in cash
or by check.  Upon the date (the "Exercise Date") of receipt of the foregoing by
the Company,  this Warrant shall be deemed to have been exercised and the person
exercising  the same to have become a holder of record of shares of Common Stock
(or of the other  securities or property to which he, she or it is entitled upon
such exercise) purchased  hereunder for all purposes,  and certificates for such
shares so purchased shall be delivered to the Holder or his transferee  within a
reasonable time (not exceeding fifteen business days),  after this Warrant shall
have been exercised as set forth hereinabove. In the event of a partial exercise
of this  Warrant as provided  in the Section 3, the holder  shall be entitled to
the  delivery  of a new  Warrant  certificate  representing  the  rights not yet
exercised.

         4. Taxes.  The  issuance  of any stock or other  certificate  upon  the
            ------
exercise of this Warrant shall be made without charge to the  registered  Holder
hereof for any tax in respect of the issuance of such  certificate.  The Company
shall not,  however,  be required to pay any  transfer or other  similar tax (if
any) that is payable in respect of any  transfer  involved in the  issuance  and
delivery of this Warrant or the exercise of the Warrant.

                                       19

<PAGE>


         5. Securities  Registration  Exemptions.  By accepting delivery of this
            ------------------------------------
Warrant,  the holder acknowledges and agrees that this Warrant and the shares of
the Common Stock to be issued  pursuant to the  exercise  hereof shall be issued
pursuant to exemptions from the registration  requirements of the Securities Act
of 1933, as amended,  and applicable  state  securities  laws.  Also, the holder
acknowledges,  upon  exercise of this  Warrant,  the stock  certificates  issued
pursuant to that exercise  shall bear  appropriate  restrictive  legends and the
shares  of Common  Stock  evidenced  by the  certificates  shall be  "restricted
securities" as defined in Securities and Exchange  Commission Rule 144 and shall
be  subject to the  limitations  in that rule on the manner and amount of shares
that can be sold during the applicable holding period.

         6. Warrant  Register.  The Company shall at all times while any portion
            ------------------
of this Warrant remains  outstanding  and  exercisable  keep and maintain at its
principal office a register in which the registration,  transfer and exchange of
this Warrant shall be provided  for. The Company  shall not at any time,  except
upon the  dissolution,  liquidation  or  winding up of the  Company,  close such
register so as to result in  preventing  or delaying the exercise or transfer of
this Warrant.  If at any time,  the Company shall appoint an agent (the "Warrant
Agent") to maintain such  register,  the Company  shall  promptly give notice by
certified or registered mail to the registered Holder hereof of the name of such
Warrant  Agent and of the place or places at which this Warrant may be presented
for transfer, exchange or exercise.

         7. Transfer.  Except as otherwise  provided herein (including Section 5
            ---------
hereof),  this Warrant and all rights  hereunder are  transferable by the Holder
hereof in person or by duly authorized attorney on the books of the Company upon
surrender of this Warrant at the principal offices of the Company, together with
the form of transfer  authorization  attached  hereto duly executed.  Absent any
such  transfer,  the  Company may deem and treat the  registered  Holder of this
Warrant at any time as the absolute  owner hereof for all purposes and shall not
be affected by any notice to the contrary.  Notwithstanding  anything  herein to
the contrary, this Warrant shall not be transferred so that the holder holds the
right to purchase  fewer than Fifty  Thousand  (50,000)  shares of the Company's
Common Stock.

         8. Covenants of the Company.  The Company covenants and agrees that all
            -------------------------
shares which may be issued upon the exercise of the rights  represented  by this
Warrant will, upon issuance,  be fully paid and  nonassessable and free from all
taxes,  liens and charges with respect to the issue thereof (other than taxes in
respect  of any  transfer  occurring  contemporaneously  with such  issue).  The
Company  further  covenants  and agrees that during the period  within which the
rights  represented  by this Warrant may be  exercised,  the Company will at all
times have authorized and reserved a sufficient number of shares of Common Stock
to provide for the exercise in full of the rights  represented  by this Warrant.
The Company will provide to or make available to, as the case may be, the Holder
of this Warrant the same  information,  reports and notices as it shall  provide
to, or make available to, the holder of its Common Stock.

         9. Notices.  Any notice  required or permitted  to  be given  hereunder
            --------
shall be in writing and shall be deemed given upon the earlier of actual receipt
or  forty-eight  (48) hours after deposit in the United States Postal Service as
certified mail,  return receipt  requested with postage  prepaid.  Notice to any
party other than the Holder shall be made to the most recent address  maintained
by the Company in its  records.  Notices to the  Company or the Holder  shall be
given to the address indicated below:

         If to the Company:
                  The Leather Factory, Inc.
                  3847 E. Loop 820 South
                  Fort Worth, Texas 76119

         If to the Holder:
                  Evert I. Schlinger
                  1944 Edison Street
                  Santa Ynez, California 93480


                                       20


<PAGE>


Either  party may change the address for notices  under this Section 9 by giving
written notice thereof to the other party.

         10. Lost, Stolen,  Mutilated,  or Destroyed  Warrants.  If this Warrant
             --------------------------------------------------
shall become lost, stolen,  mutilated, or destroyed,  the Company shall, on such
terms as to indemnity or otherwise as it may in its discretion  impose,  issue a
new  warrant  of like  denomination,  tenor,  and date as the  warrant  so lost,
stolen,  mutilated,  or  destroyed.  Any such new warrant  shall  constitute  an
original  contractual  obligation  of the Company,  whether or not the allegedly
lost, stolen,  mutilated,  or destroyed warrant shall be at any time enforceable
by anyone.

         11.  Applicable Law. The validity,  interpretation,  and performance of
              ---------------
this Warrant shall be governed by the laws of the State of Texas.

         12.  Successors  and  Assigns.  This  Warrant and the rights  evidenced
              -------------------------
hereby  shall inure to the  benefit of and be binding  upon the  successors  and
assigns of the  Company,  the  Holder  hereof  and,  the Holder of the shares of
Common Stock issued upon the exercise  hereof,  and shall be  enforceable by any
such Holder.

         13.  Headings.  Headings  of the  paragraphs  in this  Warrant  are for
              ---------
convenience and reference only and shall not, for any purpose,  be deemed a part
of this Warrant.

         IN WITNESS WHEREOF,  the Company has caused this Warrant to be executed
as of this 3rd day of August 1998, by its Chief  Financial  Officer and attested
by its Assistant Secretary and its corporate seal affixed.

                                    THE LEATHER FACTORY, INC.



                                    By:      /s/ Anthony C. Morton
                                       -------------------------------------
                                         Anthony C. Morton
                                         Chief Financial Officer & Treasurer

ATTEST:



      /s/ Robin L. Morgan
-----------------------------------
          Assistant Secretary



(CORPORATE SEAL)



                                       21


<PAGE>



                                    EXHIBIT A

           [Subscription Form to be Executed upon Exercise of Warrant]

         The  undersigned,  registered  holder or  assignee  of such  registered
holder of the within  Warrant,  hereby (1) subscribed for _____ shares (not less
than 50,000  shares)  which the  undersigned  is entitled to purchase  under the
terms of the within  Warrant,  (2) makes the full cash payment called for by the
Warrant,  and (3) directs that the shares issuable upon exercise of said Warrant
be issued as follows:



                                        --------------------------------
                                                  (Name)


                                        --------------------------------
                                                  (Address)


                                        --------------------------------
                                                  (Signature)

Dated:





<PAGE>







                                    EXHIBIT B

                                  [Assignment]


(To be  executed  by the  registered  holder to effect a transfer  of the within
Warrant)


         FOR VALUE  RECEIVED  ____________________________________  hereby sell,
assign and transfer unto  _________________________,  of  _____________________,
the right to purchase ____ shares (not less than 50,000 shares) evidenced by the
within   Warrant,   and   do   hereby   irrevocably   constitute   and   appoint
_________________________________  to  transfer  such  right on the books of the
Company, with full power of substitution.

Dated: _________________________.

                                        --------------------------------
                                                    Signature





<PAGE>













                                  EXHIBIT 10.1