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  June  30,  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 of as
              Class                                       August 11, 2003
----------------------------------------             ------------------------
Common Stock, par value $.0024 per share                    10,270,461

                                        1
<PAGE>


                            THE LEATHER FACTORY, INC.

                                    FORM 10-Q

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003


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

<TABLE>
<CAPTION>
<S>                                                                    <C>
                                                                       PAGE NO.
                                                                       --------

PART I.  FINANCIAL INFORMATION

  Item 1.  Financial Statements

    Consolidated Balance Sheets
     June 30, 2003 and December 31, 2002                                      3

    Consolidated Statements of Operations
     Three and six months ended June 30, 2003 and 2002                        4

    Consolidated Statements of Cash Flows
     Six months ended June 30, 2003 and 2002                                  5

    Consolidated Statements of Stockholders' Equity
     Six months ended June 30, 2003 and 2002                                  6

    Notes to Consolidated Financial Statements                                7

  Item 2.  Management's Discussion and Analysis of Financial
           Condition and Results of Operations                               11

  Item 3.  Quantitative and Qualitative Disclosures About Market Risk        17

  Item 4.  Controls and Procedures                                           17

PART II.  OTHER INFORMATION

  Item 4.  Submission of Matters to a Vote of Security Holders               17

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


SIGNATURES                                                                   18

</TABLE>

                                        2
<PAGE>
                            THE LEATHER FACTORY, INC.
                            -------------------------
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                JUNE 30,     DECEMBER 31,
                                                                                 2003            2002
                                                                              ----------    -------------
                                                                              (unaudited)
<S>                                                                           <C>           <C>
                              ASSETS
CURRENT ASSETS:
Cash                                                                          $   160,621   $     101,557
Cash restricted for payment on revolving credit facility                          470,121         553,839
Accounts receivable-trade, net of allowance for doubtful accounts of
   $45,000 and $78,000, respectively                                            2,821,217       1,938,698
Inventory                                                                      12,164,127      12,695,344
Prepaid income taxes                                                                5,164          55,644
Deferred income taxes                                                             150,471         159,090
Other current assets                                                              884,667         672,117
                                                                             -------------  -------------
                    Total current assets                                       16,656,388      16,176,289
                                                                              ------------  -------------

PROPERTY AND EQUIPMENT, at cost                                                 5,461,936       5,321,749
Less accumulated depreciation and amortization                                 (3,426,891)     (3,301,898)
                                                                             -------------  -------------
                    Property and equipment, net                                 2,035,045       2,019,851
                                                                              ------------  -------------

GOODWILL, net of accumulated amortization of $738,000 and $1,583,000
   in 2003 and 2002, respectively                                                 700,393         686,484
OTHER INTANGIBLES, net of accumulated amortization of $148,000 and $113,000
   in 2003 and 2002, respectively                                                 447,975         483,507
OTHER ASSETS                                                                      326,436         309,471
                                                                              ------------  -------------
                                                                              $20,166,237   $  19,675,602
                                                                              ============  =============


                    LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable                                                              $ 1,314,228   $   1,594,909
Accrued expenses and other liabilities                                            851,310       2,503,331
Notes payable and current maturities of long-term debt                          4,768,199       4,218,968
                                                                              ------------  -------------
                    Total current liabilities                                   6,933,737       8,317,208
                                                                              ------------  --------------

DEFERRED INCOME TAXES                                                             225,275         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 shares authorized,
   none issued or outstanding                                                           -               -
Common stock, $0.0024 par value; 25,000,000 shares authorized,
   10,270,461 and 10,149,961 shares issued                                         24,649          24,360
Paid-in capital                                                                 4,401,799       4,163,901
Retained earnings                                                               8,617,567       7,064,345
Less:  notes receivable secured by common stock                                   (20,000)        (44,003)
Accumulated other comprehensive loss                                              (16,790)        (38,541)
                                                                              ------------  --------------
                    Total stockholders' equity                                 13,007,225      11,170,062
                                                                              ------------  --------------
                                                                              $20,166,237   $  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 AND SIX MONTHS ENDED JUNE 30, 2003 AND 2002

<TABLE>
<CAPTION>

<S>                                                                  <C>             <C>             <C>           <C>
                                                                             THREE MONTHS                  SIX MONTHS
                                                                          2003           2002           2003           2002
                                                                     -------------   -----------     -----------   -----------
<S>                                                                  <C>             <C>             <C>           <C>
NET SALES                                                            $  10,460,675   $10,052,036     $21,020,760   $20,255,987

COST OF SALES                                                            4,739,621     4,616,410       9,654,202     9,451,766
                                                                     -------------   -----------     -----------   -----------
          Gross profit                                                   5,721,054     5,435,626      11,366,558    10,804,221

OPERATING EXPENSES                                                       4,566,590     4,224,477       9,096,422     8,399,613
                                                                     -------------   -----------     -----------   -----------
INCOME FROM OPERATIONS                                                   1,154,464     1,211,149       2,270,136     2,404,608

OTHER INCOME (EXPENSE):
          Interest expense                                                 (70,468)      (47,442)       (133,820)     (137,311)
          Other, net                                                        43,705       (10,266)         74,523       (26,621)
                                                                     -------------   -----------     -----------   -----------
               Total other income (expense)                                (26,763)      (57,708)        (59,297)     (163,932)
                                                                     -------------   -----------     -----------   -----------

INCOME BEFORE INCOME TAXES and CUMULATIVE EFFECT OF CHANGE
        IN ACCOUNTING PRINCIPLE.                                         1,127,701     1,153,441       2,210,839     2,240,676

PROVISION FOR INCOME TAXES                                                 348,997       361,394         657,617       689,324
                                                                     -------------   -----------     -----------   -----------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE          778,704       792,047       1,553,222     1,551,352

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE,
        net of income taxes.                                              .      -             -               -    (4,008,831)
                                                                     -------------   -----------     -----------   -----------
NET INCOME (LOSS)                                                    $     778,704   $   792,047     $ 1,553,222   $(2,457,479)
                                                                     =============   ===========     ===========   ===========

NET  INCOME  (LOSS)  PER  COMMON  SHARE  -  BASIC:

INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE    $        0.08   $      0.08     $      0.15   $      0.15

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, NET                         -             -               -         (0.40)
                                                                     -------------   -----------     -----------   -----------
NET INCOME (LOSS) PER COMMON SHARE-BASIC                             $        0.08   $      0.08     $      0.15   $     (0.25)
                                                                     =============   ===========     ===========   ===========

NET  INCOME  (LOSS)  PER  COMMON  SHARE  -  DILUTED:

INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE    $        0.07   $      0.07     $      0.14   $      0.14

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, NET                         -             -               -         (0.37)
                                                                     -------------   -----------     -----------   -----------
NET INCOME (LOSS) PER COMMON SHARE-DILUTED                           $        0.07   $      0.07     $      0.14   $     (0.23)
                                                                     =============   ===========     ===========   ===========
</TABLE>

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


                            THE LEATHER FACTORY, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                     SIX MONTHS ENDED JUNE 30, 2003 AND 2002

<TABLE>
<CAPTION>
                                                                             2003          2002
                                                                         -----------   ------------
<S>                                                                      <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                                      $ 1,553,222   $(2,457,479)
  Adjustments to reconcile net income (loss) to net
   cash (used in) provided by operating activities-
     Depreciation & amortization                                             275,127       242,534
     Loss on disposal of assets                                                9,372             -
     Amortization of deferred financing costs                                      -        37,038
     Deferred income taxes                                                    47,818       (29,862)
     Other                                                                     7,843          (881)
     Cumulative effect of change in accounting principle                           -     4,008,831
     Net changes in assets and liabilities:
       Accounts receivable-trade, net                                       (882,519)     (310,362)
       Inventory                                                             531,217      (390,018)
       Income taxes                                                           50,479         4,849
       Other current assets                                                  (86,169)     (480,041)
       Accounts payable                                                     (280,681)      590,605
       Accrued expenses and other liabilities                             (1,652,021)       90,406
                                                                         -----------   ------------
     Total adjustments                                                    (1,979,534)    3,763,099
                                                                         -----------   ------------
      Net cash (used in) provided by operating activities                   (426,312)    1,305,620
                                                                         -----------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment                                        (270,377)     (232,810)
  Payments in connection with businesses acquired                                  -      (227,747)
  Proceeds from sale of assets                                                 6,217             -
  Increase in other assets                                                   (16,966)       (3,648)
                                                                         -----------   ------------
      Net cash used in investing activities                                 (281,126)     (464,205)
                                                                         -----------   ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net increase (decrease) in revolving credit loans                          550,201    (1,177,152)
  Payments on notes payable and long-term debt                                (3,226)      (23,936)
  Decrease in cash restricted for payment on revolving credit facility        83,718        37,198
  Payments received on notes secured by common stock                          24,003        24,636
  Proceeds from issuance of common stock                                     111,806        76,495
                                                                         -----------   ------------
      Net cash provided by (used in) financing activities                    766,502    (1,062,759)
                                                                         -----------   ------------
NET CHANGE IN CASH                                                            59,064      (221,344)

CASH, beginning of period                                                    101,557       409,040
                                                                         -----------   ------------
CASH, end of period                                                      $   160,621   $   187,696
                                                                         ===========   ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Interest paid during the period                                        $   131,122   $   106,843
  Income taxes paid during the period, net of (refunds)                      512,151       732,091
</TABLE>

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

                            THE LEATHER FACTORY, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                   (UNAUDITED)
                     SIX MONTHS ENDED JUNE 30, 2003 AND 2002

<TABLE>
<CAPTION>

                                                                        Common Stock
                                                               ---------------------------------
                                                                   Number             Par              Paid-in          Retained
                                                                 of shares           value             capital          Earnings
                                                               -------------   -----------------  ------------------  ------------
<S>                                                            <C>             <C>                <C>                 <C>
BALANCE, December 31, 2001                                         9,991,161   $          23,979  $        4,030,508  $ 8,478,187

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

  Shares issued - employee
       stock options exercised                                        73,000                 175              76,320            -

  Net loss                                                                 -                   -                   -   (2,457,479)

  Translation adjustment                                                   -                   -                   -            -
                                                               -------------   -----------------  ------------------  ------------
BALANCE, June 30, 2002                                            10,064,161   $          24,154  $        4,106,828  $ 6,020,708
                                                               =============   =================  ==================  ===========



BALANCE, December 31, 2002                                        10,149,961   $          24,360  $        4,163,901  $ 7,064,345

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

  Shares issued - employee
    stock options exercised                                          120,500                 289             111,517            -

  Warrants issued to acquire 100,000
    shares of common stock                                                 -                   -             126,381            -

  Net income                                                               -                   -                   -    1,553,222

  Translation adjustment                                                   -                   -                   -            -
                                                               -------------   -----------------  ------------------  ------------
BALANCE, June 30, 2003                                            10,270,461   $          24,649  $        4,401,799  $ 8,617,567
                                                               =============   =================  ==================  ===========



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

  Payments on notes receivable -
       secured by common stock                                        24,636             -           24,636

  Shares issued - employee
       stock options exercised                                             -             -           76,495

  Net loss                                                                 -             -       (2,457,479)    (2,457,479)

  Translation adjustment                                                   -         3,197            3,197          3,197
                                                               --------------  ------------  --------------
BALANCE, June 30, 2002                                         $     (47,303)  $   (33,867)  $   10,070,520
                                                               ==============  ============  ==============  --------------
  Comprehensive loss for the six months ended June 30, 2002                                                  $  (2,454,282)
                                                                                                             ==============

BALANCE, December 31, 2002                                     $     (44,003)  $   (38,541)  $   11,170,062

  Payments on notes receivable -
       secured by common stock                                        24,003             -           24,003

  Shares issued - employee
    stock options exercised                                                -             -          111,806

  Warrants issued to acquire 100,000
    shares of common stock                                                 -             -          126,381

  Net income                                                               -             -        1,553,222     $1,553,222

  Translation adjustment                                                   -        21,751           21,751         21,751
                                                               --------------  ------------  --------------
BALANCE, June 30, 2003                                        $     (20,000)  $   (16,790)  $   13,007,225
                                                               ==============  ============  ==============  --------------
  Comprehensive income for the six months ended June 30, 2003                                                   $1,574,973
                                                                                                             ==============
</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 June
30, 2003 and December 31, 2002, and its results of operations and cash flows for
the  three  and  six  month  periods  ended  June  30,  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 and six month
periods  ended  June 30, 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.    The
components  of  inventory  consist  of  the  following  as  of:
<TABLE>
<CAPTION>

<S>                                <C>          <C>
                                    JUNE 30,     DECEMBER 31,
                                      2003           2002
                                   -----------  -------------
Finished goods held for sale       $10,938,773  $  11,693,868
Raw materials and work in process    1,225,354      1,001,476
                                   -----------  -------------
                                   $12,164,127  $  12,695,344
                                   ===========  =============
</TABLE>
                                        7
<PAGE>

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 carrying 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 six months of 2003.

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

                                    AS OF JUNE 30, 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  $      130,227    $414,142           $    544,369  $     102,029    $442,340
Non-Compete Agreements        52,000          18,167      33,833                 52,000         10,833      41,167
                        ------------  --------------    --------           ------------  -------------    --------
                        $    596,369  $      148,394    $447,975           $    596,369  $     112,862    $483,507
                        ============  ==============    ========           ============  =============    ========
</TABLE>

The Company recorded amortization expense of $38,256 during the first six months
of  2003  compared to $23,374 during the first half 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>
<C>        <S>               <C>             <C>          <C>
                                             ROBERTS
           LEATHER FACTORY.  TANDY LEATHER   CUSHMAN      TOTAL
           ----------------  --------------  --------     -------
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 and six months ended June 30, 2003 and 2002, on a
pro  forma  basis,  would  have  been  as  follows:
<TABLE>
<CAPTION>

                                                                                  THREE MONTHS ENDED JUNE 30,
                                                                                    2003               2002
                                                                              -------------------  --------------
<S>                                                                           <C>                  <C>
Net income (loss), as reported                                                $        778,704     $      792,047

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                                                  $        758,438     $      766,142

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

Diluted - as reported                                                         $           0.07     $         0.07
Diluted - pro forma                                                           $           0.07     $         0.07


                                                                                   SIX MONTHS ENDED JUNE 30,
                                                                                    2003                2002
                                                                              ----------------     --------------
<S>                                                                           <C>                  <C>
Net income (loss), as reported                                                $      1,553,222     $   (2.457.479)

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

Deduct: Stock-based compensation expense determined under fair value method             40,533             51,810
                                                                              ----------------     --------------
Net income (loss), pro forma                                                  $      1,512,689     $   (2,509,288)

Net income (loss) per share:
Basic - as reported                                                           $           0.15     $        (0.25)
Basic - pro forma                                                             $           0.15     $        (0.25)

Diluted - as reported                                                         $           0.14     $        (0.23)
Diluted - pro forma                                                           $           0.14     $        (0.23)
</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  2.62%  for 2003 and 3.00% for 2002;
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"):
<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED            SIX MONTHS ENDED
                                                                 JUNE 30,                     JUNE 30,
                                                       --------------------------    -------------------------
                                                           2003            2002          2003         2002
                                                       ------------  ------------    -----------  ------------
<S>                                                    <C>           <C>             <C>          <C>
Numerator:
  Net  income (loss)                                   $    778,704  $    792,047    $ 1,553,222  $(2,457,479)
                                                       ------------  ------------    -----------  ------------
  Numerator for basic and diluted earnings per share        778,704       792,047      1,553,222   (2,457,479)

Denominator:
  Weighted-average shares outstanding-basic              10,234,054    10,041,018     10,205,900   10,021,476

Effect of dilutive securities:
  Stock options                                             398,684       503,871        423,109      496,061
  Warrants                                                  172,281       254,741        173,668      252,355
                                                       ------------  ------------    -----------  ------------
Dilutive potential common shares                            570,965       758,612        596,777      748,416
                                                       ------------  ------------    -----------  ------------

  Denominator for diluted earnings per share-
  weighted-average shares                                10,805,019    10,799,630     10,802,677   10,769,892
                                                       ============  ============    ===========  ===========

  Basic earnings (loss) per share                      $       0.08  $       0.08    $      0.15  $     (0.25)
                                                       ============  ============    ===========  ===========
  Diluted earnings (loss) per share                    $       0.07  $       0.07    $      0.14  $     (0.23)
                                                       ============  ============    ===========  ===========
</TABLE>

The  net  effect  of  converting stock options to purchase 684,700 and 1,126,000
shares  of common stock at option prices less than the average market prices has
been  included  in  the computations of diluted EPS for the three and six months
ended  June  30,  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>

<S>                                     <C>                <C>                <C>               <C>
                                        LEATHER FACTORY     TANDY LEATHER     ROBERTS,CUSHMAN      TOTAL
                                        ----------------   ----------------   ----------------  -----------
FOR THE QUARTER ENDED JUNE 30, 2003
Net sales                               $      7,801,742   $      2,113,479   $        545,454  $10,460,675
Gross profit                                   4,182,812          1,325,072            213,170    5,721,054
Operating earnings                               918,434            166,230             69,800    1,154,464
Interest expense                                 (70,468)                 -                  -      (70,468)
Other, net                                        43,091                614                  -       43,705
                                                                                                -----------
Income before income taxes                       891,057            166,844             69,800    1,127,701
                                                                                                -----------
     Depreciation and amortization               129,328             18,247              2,521      150,096
     Fixed asset additions                       112,605             62,944                856      176,405
     Total assets                       $     16,163,098   $      3,078,121   $        925,018  $20,166,237
                                        ----------------   ----------------   ----------------  -----------

FOR THE QUARTER ENDED JUNE 30, 2002
Net sales                               $      7,700,422   $      1,814,310   $        537,304  $10,052,036
Gross profit                                   4,175,742          1,079,238            180,646    5,435,626
Operating earnings                             1,018,799             97,536             94,814    1,211,149
Interest expense                                 (47,253)              (189)                 -      (47,442)
Other, net                                       (10,134)              (132)                 -      (10,266)
                                                                                                -----------
Income before income taxes                       961,412             97,215             94,814    1,153,441
                                                                                                -----------
     Depreciation and amortization                88,219             28,159              3,163      119,541
     Fixed asset additions                        56,840             77,390                958      135,188
     Total assets                       $     12,912,434   $      2,999,716   $        788,501  $16,700,651
                                        ----------------   ----------------   ----------------  -----------

                                        LEATHER FACTORY     TANDY LEATHER     ROBERTS,CUSHMAN      TOTAL
                                        ----------------   ----------------   ----------------  -----------
FOR THE SIX MONTHS ENDED JUNE 30, 2003
Net sales                               $     16,003,000   $      3,978,018   $      1,039,742  $21,020,760
Gross profit                                   8,480,314          2,506,403            379,841   11,366,558
Operating earnings                             1,842,071            313,223            114,842    2,270,136
Interest expense                                (133,820)                 -                  -     (133,820)
Other, net                                        74,381                142                  -       74,523
                                                                                                -----------
Income before income taxes                     1,782,632            313,365            114,842    2,210,839
                                                                                                -----------
     Depreciation and amortization               235,695             34,086              5,346      275,127
     Fixed asset additions                       152,102            117,419                856      270,377
     Total assets                       $     16,163,098   $      3,078,121   $        925,018  $20,166,237
                                        ----------------   ----------------   ----------------  -----------

FOR THE SIX MONTHS ENDED JUNE 30, 2002
Net sales                               $     15,524,939   $      3,692,183   $      1,038,865  $20,255,987
Gross profit                                   8,302,614          2,152,817            348,790   10,804,221
Operating earnings                             1,994,526            239,037            171,045    2,404,608
Interest expense                                (136,908)              (403)                 -     (137,311)
Other, net                                       (25,988)              (633)                 -      (26,621)
                                                                                                -----------
Income before income taxes                     1,831,630            238,001            171,045    2,240,676
                                                                                                -----------
     Depreciation and amortization               184,127             51,862              6,545      242,534
     Fixed asset additions                       128,369            102,903              1,538      232,810
     Total assets                       $     12,912,434   $      2,999,716   $        788,501  $16,700,651
                                        ----------------   ----------------   ----------------  -----------
</TABLE>
                                       11
<PAGE>

Net  sales  for  geographic  areas  were  as  follows:
<TABLE>
<CAPTION>
                      THREE MONTHS ENDED JUNE 30,       SIX MONTHS ENDED JUNE 30,
                     ----------------------------      ----------------------------
<S>                  <C>            <C>                <C>            <C>
                         2003           2002                2003           2002
                     -------------  -------------      -------------  -------------
United States        $   9,711,785  $   9,448,686      $  19,582,421  $  19,111,120
All other countries        748,890        603,350          1,438,339      1,144,867
                     -------------  -------------      ------------- -- -----------
                     $  10,460,675  $  10,052,036      $  21,020,760  $  20,255,987
                     =============  =============      =============  =============
</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 and six month periods ended June 30, 2003 and 2002.  The
Company  does  not  have any significant long-lived assets outside of the United
States.


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 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 July 31, 2003, we have
opened  22  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.

                                       12
<PAGE>

RESULTS  OF  OPERATIONS
-----------------------

The  following  tables  present selected financial data of each of the Company's
three  segments  for  the  quarters and six months ended June 30, 2003 and 2002:
<TABLE>
<CAPTION>

                  QUARTER ENDED JUNE 30, 2003         QUARTER ENDED JUNE 30, 2002
                  ---------------------------         ---------------------------
<S>               <C>            <C>                   <C>            <C>
                                   OPERATING                           OPERATING
                       SALES        INCOME                 SALES         INCOME
                  -------------  ------------          -------------  ------------
Leather Factory   $   7,801,742  $    918,434          $   7,700,422  $  1,018,799
Tandy                 2,113,479       166,230              1,814,310        97,536
Cushman                 545,454        69,800                537,304        94,814
                  -------------  ------------          -------------  ------------
Total Operations  $  10,460,675  $  1,154,464          $  10,052,036  $  1,211,149
                  =============  ============          =============  ============
</TABLE>

<TABLE>
<CAPTION>

                  SIX MONTHS ENDED JUNE 30, 2003         SIX MONTHS ENDED JUNE 30, 2002
                  ------------------------------         ------------------------------
<S>               <C>               <C>                   <C>              <C>
                                      OPERATING                             OPERATING
                       SALES           INCOME                 SALES           INCOME
                  -------------     ------------          -------------    ------------
Leather Factory   $  16,003,000     $  1,842,071          $  15,524,939    $  1,994,526
Tandy                 3,978,018          313,223              3,692,183         239,037
Cushman               1,039,742          114,842              1,038,865         171,045
                  -------------     ------------          -------------    ------------
Total Operations  $  21,020,760     $  2,270,136          $  20,255,987    $  2,404,608
                  =============     ============          =============    ============
</TABLE>

Consolidated  net  sales for the quarter ended June 30, 2003 increased $408,000,
or  4.1%,  compared  to  the  same  period  in  2002,  with  all  three segments
contributing  to the increase.  Leather Factory's sales gain was $101,000; Tandy
contributed  $299,000  and Cushman recorded a gain  of $8,000.  Operating income
on  a  consolidated  basis  for the quarter ended June 30, 2003 was down 4.7% or
$57,000  over  the  second  quarter  of  2002.
<TABLE>
<CAPTION>

                                                                  $INCR      % INCR
                       QTR ENDED 6/30/03   QTR ENDED 6/30/02      (DECR)     (DECR)
                       ------------------  ------------------  -----------   ------
<S>                    <C>                 <C>                 <C>           <C>
Same Store Sales       $        8,851,661  $        8,697,269  $   154,392    1.78%
New Store Sales                 1,607,686              57,842    1,549,844      N/A
Closed Store Sales                  1,328           1,296,925   (1,295,597)     N/A
                       ------------------  ----------------    -----------   ------
                Total  $       10,460,675  $       10,052,036  $   408,639    4.07%
                       ==================  ==================  ===========   ======
</TABLE>

Same  store sales for the quarter includes 29 Leather Factory stores, four Tandy
stores,  and  Cushman.  New store sales include one Leather Factory store and 18
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.

Consolidated  net  sales  for  the  six  months  ended  June  30, 2003 increased
$765,000,  or  3.8%,  compared  to  the  same  period  in 2002.  Leather Factory
contributed  $609,000  of  the sales gain while Tandy added $155,000.  Cushman's
2003  sales  were  even  with  those  of  a  year  ago.  Operating  income  on a
consolidated  basis  for  the  six  months  ended June 30, 2003 was down 5.6% or
$134,000  over  last  year.
                                       13
<PAGE>
<TABLE>
<CAPTION>

                                                                                $INCR      % INCR
                       SIX MONTHS ENDED 6/30/03   SIX MONTHS ENDED 6/30/02      (DECR)     (DECR)
                       -------------------------  -------------------------  -----------   ------
<S>                    <C>                        <C>                        <C>           <C>
Same Store Sales       $              17,202,684  $              16,754,355  $   448,329    2.68%
New Store Sales                        3,815,688                    502,139    3,313,549      N/A
Closed Store Sales                         2,388                  2,999,493   (2,997,105)     N/A
                       -------------------------  -------------------------  -----------   ------
                Total  $              21,020,760  $              20,255,987  $   764,773    3.78%
                       =========================  =========================  ===========   ======
</TABLE>

Same  store  sales  for  the  six  months ended June 30, 2003 include 29 Leather
Factory  stores,  one  Tandy  store,  and  Cushman.  New store sales include one
Leather  Factory  store  and  21  Tandy  stores.

LEATHER  FACTORY  OPERATIONS

Net  sales  from  Leather  Factory's  30  stores  increased 1.32% for the second
quarter  of  2003  as  follows:
<TABLE>
<CAPTION>

                              QTR ENDED   QTR ENDED    $INCR     % INCR
                               6/30/03     6/30/02     (DECR)    (DECR)
                              ----------  ----------  --------  --------
<S>                           <C>         <C>         <C>        <C>
Same store sales (29 stores)  $7,668,988  $7,700,422  $(31,433)  (0.41)%
New store sales (1 store)        132,753           -   132,753      ***
                              ----------  ----------  --------  --------
Total sales                   $7,801,742  $7,700,422  $101,320     1.32%
                              ==========  ==========  ========  ========
</TABLE>

The  following  table  presents  TLF's  sales mix by customer categories for the
quarters  ended  June  30,  2003  and  2002:
<TABLE>
<CAPTION>

                                                                                           QUARTER ENDED
<S>                                                                                    <C>             <C>
CUSTOMER GROUP                                                                          6/30/03         6/30/02
-------------------------------------------------------------------------------------  ---------        -------
  RETAIL (end users, consumers, individuals)                                                  19%           18%
  INSTITUTION (prisons, prisoners, hospitals, schools, YMCA, Boy Scouts, etc.)                 8             8
  WHOLESALE (saddle & tack stores, resellers & distributors, shoe repair shops, etc.)         29            34
  CRAFT (craft stores (individually owned) and craftstore chains)                             28            25
  MIDAS (small manufacturers)                                                                  9             8
  ASC (Authorized Sales Centers)                                                               7             7
                                                                                       ---------        -------
                                                                                             100%          100%
                                                                                       =========        =======
</TABLE>
                                       14
<PAGE>

Modest  sales  gains  were  achieved  in  our  RETAIL and CRAFT customer groups.
However, those gains were offset by a decrease in our WHOLESALE group.  Sales to
our  wholesale  customers,  which  include  saddle  and  tack  customers,  small
resellers and dealers, were down approximately 15% in the second quarter of 2003
compared  to last year.  Of all our customer groups, WHOLESALE appears to be the
most significantly impacted currently by the struggling economy.  Their sales to
their  customers  are down which quickly affects their ability to purchase goods
from  us.  We  boosted  our  advertising and marketing efforts to this WHOLESALE
group late in the second quarter by increasing the quality and size of the sales
flyer  produced  and  expanding  the  number  of  pieces  mailed to them.  These
efforts,  while  not  having sufficient time to impact our second quarter sales,
are  showing  signs  of  success  early  in  the  third  quarter.

Operating  income for Leather Factory decreased $100,000 for the current quarter
compared  to  2002.  Operating  expenses  as a percentage of sales in the second
quarter  of  2003  were 43.6%, up from 42.0% a year ago. Included in the Leather
Factory  operating  expenses  are most corporate and administrative expenses for
the  entire  company.  Management's  increased  emphasis  on  investor relations
accounts  for  the majority of the operating expense increase of $342,000 in the
current  quarter  when  compared  to  the  second  quarter  of  2002.

TANDY  LEATHER  OPERATIONS

Net  sales for Tandy, which consisted of twenty-two retail stores as of June 30,
2003,  were  up 16.49% for the second quarter of 2003 over the same quarter last
year,  which  consisted of six retail stores and the order fulfillment house, as
follows:
<TABLE>
<CAPTION>
                                        QTR ENDED    QTR ENDED     $INCR       % INCR
                                         6/30/03      6/30/02      (DECR)      (DECR)
                                        ----------  ----------  ------------  --------
<S>                                     <C>         <C>         <C>           <C>
Same store sales (4 stores)             $  637,218  $  459,542  $   177,676     38.66%
New store sales (18 stores)              1,474,932      57,843   1,417,0089       ***
Closed store (order fulfillment house)       1,329   1,296,925   (1,295,596)  (99.90.)
                                        ----------  ----------  ------------  --------
Total sales                             $2,113,479  $1,814,310  $   299,169     16.49%
                                        ==========  ==========  ===========   ========
</TABLE>

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, "new store sales" for
the  quarter  ended  June  30,  2002  includes our Sacramento and Salt Lake City
stores  because  those  stores were only open for one month in the quarter (both
stores were opened in June 2002).  "Same store sales" include the East Hartford,
CT  store  because  it  opened  in  April  2002.

Sales  in  the  current  quarter  showed healthy growth.  The four "same stores"
continue  to  post strong gains.  The order fulfillment house began winding down
its operations a year ago as the retail store operation continue to increase its
presence  across  the  country.  Average sales per month in the stores that have
been  opened for at least three moths as of June 30, 2003 is still $37,000 (same
as  the  average at the end of March 2003) which beats our internal expectations
of  $30,000  per  month  per  store.

The  following  table  presents Tandy's sales mix by customer categories for the
quarters  ended  June  30,  2003  and  2002:
<TABLE>
<CAPTION>
<S>                                                                                    <C>            <C>
                                                                                            QUARTER ENDED
CUSTOMER GROUP                                                                           6/30/03      6/30/02
-------------------------------------------------------------------------------------  ----------     -------
  RETAIL (end users, consumers, individuals)                                                  67%         57%
  INSTITUTION (prisons, prisoners, hospitals, schools, YMCA, Boy Scouts, etc.)                10          17
  WHOLESALE (saddle & tack stores, resellers & distributors, shoe repair shops, etc.)         18          16
  CRAFT (craft stores (individually owned) and craftstore chains)                              *           *
  MIDAS (small manufacturers)                                                                  *           1
  ASC (Authorized Sales Centers)                                                               5           9
                                                                                       ----------     -------
                                                                                             100%        100%
                                                                                       ==========     =======
</TABLE>
                                       15
<PAGE>

Second  quarter  operating  income  for  Tandy  increased  $69,000  or  70% over
operating  income  in last year's second quarter.  Gross profit margins improved
from  59.5%  to  62.7%  for  the quarter due primarily to the increase in retail
sales  versus other sales categories.  Operating expenses were 54.8% of sales in
the current quarter compared to 54.6% in the same quarter last year.  Additional
personnel  costs (wages, benefits, etc.), rents, utilities, etc. associated with
the  new  stores  accounted  for  the operating expense increase over last year.

ROBERTS,  CUSHMAN  OPERATIONS

Net  sales  for Cushman increased $8,000 for the second quarter of 2003 over the
second  quarter  of  2002.  Operating  income  for  Cushman  decreased  $25,000.
Increases  in insurance costs and Cushman's allowance for uncollectible accounts
(which  results  in  an  increase  in  bad  debt  expense in the current period)
accounted  for  the  operating income reduction.  We have noticed a slow down in
collections  from  customers during the quarter.  We continue to closely monitor
outstanding  accounts  and have no reason to believe that we will not be able to
collect  those  accounts  in full.  However, in accordance with our conservative
management  policy,  we  believe  the  increase  in  the  allowance  account  is
appropriate.

OTHER  EXPENSES

Interest expense of $70,468 in the second quarter of 2003 increased from $47,442
in  the second quarter of 2002.  The increase was attributable to an increase in
the  average debt balance in the current quarter versus a year ago.  The average
debt  balance for the first six months of 2003 was $5.4 million compared to $3.2
million  for  the  first  six  months  of  2002.

CAPITAL  RESOURCES,  LIQUIDITY  AND  FINANCIAL  CONDITION
---------------------------------------------------------

There was a slight change (2.5%) in our consolidated balance sheet from December
31,  2002 to June 30, 2003.  Total assets increased from $19,675,602 at year-end
to  $20,166,237  at June 30.  Our accounts receivable accounted for the majority
of  the  increase,  partially  offset  by  a  decrease  in  inventory.  Total
stockholders'  equity  increased  from  $11,170,062  at  December  31,  2002  to
$13,007,225  at  June  30,  2003.  The increase in equity is attributable to the
earnings  in  the  first  half  of  the  year.

Inventory  decreased  $531,000  at  June 30, 2003 from year-end 2002.  Inventory
turnover  decreased  to  an  annualized  rate of 3.52 times during the first six
months  of  2003, a slowdown from 4.36 times for the first half of 2002 and 3.65
times for all of 2002.  The slowdown in turns is still due primarily to the high
inventory  balance  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
decreased  purchases  of  product  significantly  from  March through June 2003,
resulting  in  the  decreased  inventory  at  June  30,  2003.
                                       16
<PAGE>

Leather  Factory  stores  are  holding an average inventory of $89,000 per store
which  is  in  line with management's target of $90,000 per store.  Tandy stores
are averaging $57,000 of inventory per store - slightly higher than management's
target  of  $50,000  or  less.  We  monitor  inventory levels in the stores on a
continual  basis  and  are  working  closely with the store managers to optimize
their  inventory  with  their  sales  volumes  on  a  store  by  store  basis.

The  Company's  investment  in  accounts receivable was $2.8 million at June 30,
2003,  up  $882,000 from $1.9 million at year-end 2002, resulting from increased
credit  sales.  Consolidated  average days to collect accounts improved slightly
over the first half of 2002 from 44.3 days to 43.3 days.  Leather Factory posted
the most improvement in average days to collect accounts, from 43.5 days to 40.2
days  outstanding.  Tandy  and  Cushman  days outstanding increased in the first
half  of  2003  compared  to 2002, from 38.88 and 54.26 days in 2002 to 43.7 and
68.2  days  in  2003,  respectively.

Accounts  payable  decreased  $281,000  to $1.3 million at the end of the second
quarter,  due  primarily  to  the  reduction  in  inventory purchases during the
period.  Accrued  expenses  and  other  liabilities decreased $1.6 million, from
$2.5  million  at December 31, 2002 to $851,000 at June 30, 2003.  The reduction
is  due  to the decrease of accrued inventory in transit of $1.0 million between
December  31  and  June  30  as  well  as  the  change in the balance of accrued
managers'  bonuses.  Bonuses  are  accrued  throughout  the  year  based  on the
operating  profits  of  each  stores  and  then paid annually in March.  Accrued
bonuses  at December 31, 2002 totaled $930,000 compared to that at June 30, 2003
totaling  $285,000.  Notes  payable  and  current  maturities  of long-term debt
increased from $4.2 million at the end of 2002 to $4.8 million at June 30, 2003.
However,  during  the  second  quarter  of  2003  (from March 31 to June 30), we
reduced  our  debt  by  $1.0  million.

The  Company's current ratio rose from 2.08 at December 31, 2002 to 2.40 at June
30,  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 June 30,
2003  would  have  been  7.68, an improvement of 5.28.  Management believes that
disclosure  of  this non-GAAP information aids the reader's understanding of the
Company's  balance  sheets.

During  the  first  half  of  2003,  cash flows used in operating activities was
$426,000.  The  annual  manager bonus payments accounted for the majority of the
operating  cash used during the period.  Cash flows used in investing activities
totaled  $281,000,  the  majority  of  which was for capital expenditures in the
amount  of $270,000.  The majority of the purchases was for the new Tandy stores
opened.  We  also  completed the construction of the Stohlman Leather Musuem and
Gallery located inside our Fort Worth store during the second quarter of 2003 at
a  total  cost  of  $25,000.  Cash  flows  provided  by financing activities was
$767,000,  representing our net borrowings against our revolving credit facility
for  the  year  and  cash received from employees on exercises of stock options.

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  June  30, 2003, the available and unused portion of the credit
facility  was  approximately  $2.3  million.
                                       17
<PAGE>

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

This  report  (particularly  Items  2,  3  and  4  of  this  Part  I)  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:

-     Continued  involvement  by  the  United  States  in  military  and  other
operations in the Middle East and other areas abroad 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 opening of additional
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.
                                       18
<PAGE>

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.

ITEM  4.  CONTROLS  AND  PROCEDURES

At the end of the second quarter of 2003, 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-15(b)
under  the  Securities  Exchange  Act  of 1934, as amended (the "Exchange Act").
Based  upon  this  evaluation,  they  concluded that, subject to the limitations
described  below,  the  Company's  disclosure  controls  and  procedures  offer
reasonable  assurance  that  the  information  required  to  be disclosed by the
Company  in  the reports it files under the Exchange Act is recorded, processed,
summarized,  and  reported  within  the  time periods specified in the rules and
forms  adopted  by  the  Securities  and  Exchange  Commission.

During  the  period covered by this report, there has been no significant change
in  the  Company's  internal  controls  over financial reporting that materially
affected,  or  is  reasonably  likely  to  materially  affect,  these  controls.

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 will prevent all error and
all  fraud.  A  well conceived and operated control system 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.

PART  II.  OTHER  INFORMATION

ITEM  4.  SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

On  May 15, 2003, the Annual Meeting of the Stockholders of the Company was held
in the Champions Ballroom III at the Wyndham Hotel, Arlington, Texas to consider
and act on the election of the following individuals to serve as directors until
the  Company's 2004 Annual Meeting of Stockholders or until their successors are
duly  elected  and  qualified:

      Shannon  L.  Greene     Michael A. Markwardt              Joseph R. Mannes
      T.  Field  Lange        Ronald  C.  Morgan                Wray  Thompson
                              H.W.  "Hub"  Markwardt

The  following table shows the votes cast for and against, as well as those that
abstained  from  voting,  the  election of these individuals as directors of the
Company:
<TABLE>
<CAPTION>
<S>                        <C>             <C>           <C>
                              For          Against       Abstaining
                           ---------       -------       ----------
Shannon L. Greene          7,112,364        18,344                0
T. Field Lange             7,127,203         3,505                0
Joseph R. Mannes           7,103,110        27,598                0
H.W. "Hub" Markwardt       7,101,222        29,481                0
Michael A. Markwardt       7,100,627        30,081                0
Ronald C. Morgan           7,112,364        18,344                0
Wray Thompson              7,112,364        18,344                0
</TABLE>

The  Company's proxy statement dated April 15, 2003, for the 2003 Annual Meeting
of Stockholders, provided detailed information about this meeting and the action
to  be  taken  there.
                                       19
<PAGE>

ITEM  6.  EXHIBITS  AND  REPORTS  ON  FORM  8-K

(a)  Exhibits
     --------
<TABLE>
<CAPTION>
<S>      <C>
EXHIBIT
NUMBER.  EXHIBIT
-------  -----------------------------------------------------------------------------------------------------------------------
31.1     Certification of Chief Executive Officer pursuant to Rule 13a-14(a)
31.2     Certification of Chief Financial Officer pursuant to Rule 13a-14(a)
32       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.

On  July  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 2nd Quarter
2003  Results" relating to the result of our second quarter ended June 30, 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:  August  13,  2003       By:   /s/  Wray  Thompson
                                    --------------------
                                    Wray  Thompson
                                    Chairman  and  Chief  Executive  Officer

Date:  August  13,  2003       By:  /s/Shannon  L.  Greene
                                    ----------------------
                                    Shannon  L.  Greene
                                    Chief  Financial Officer and Treasurer
                                        (Chief Accounting Officer)

                                       20
<PAGE>

EXHIBIT  31.1
-------------

                                  CERTIFICATION

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 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 report;

3.     Based  on  my  knowledge,  the  financial statements, and other financial
information included in this 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  report;

4.     The  registrant's  other  certifying  officer  and  I are responsible for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-15(e)  and  15d-15(e))  for  the  registrant and have:

     a.  Designed  such  disclosure  controls  and  procedures,  or  caused such
disclosure  controls  and  procedures  to  be designed under our supervision, to
ensure  that  material  information  relating  to  the registrant, including its
consolidated  subsidiaries, is made known to us by others within those entities,
particularly  during  the  period  in  which  this  report  is  being  prepared;

     b.  Evaluated the effectiveness of the registrant's disclosure controls and
procedures  and presented in this report our conclusions about the effectiveness
of  the  disclosure controls and procedures, as of the end of the period covered
by  this  report  based  on  such  evaluation;  and

     c. Disclosed in this report any change in the registrant's internal control
over  financial  reporting  that  occurred  during  the registrant's most recent
fiscal  quarter  that  has  materially  affected,  or  is  reasonable  likely to
materially  affect,  the registrant's internal control over financial reporting;
and

5.     The  registrant's other certifying officer(s) and I have disclosed, based
on  our  most recent evaluation of internal control over financial reporting, to
the  registrant's  auditors and the audit committee of the registrant's board of
directors  (or  persons  performing  the  equivalent  functions):

     a.  All  significant  deficiencies and material weaknesses in the design or
operation  of  internal  control  over  financial reporting which are reasonably
likely  to  adversely  affect  the  registrant's  ability  to  record,  process,
summarize  and  report  financial  information;  and

     b.  Any  fraud,  whether or not material, that involves management or other
employees  who have a significant role in the registrant's internal control over
financial  reporting.

August  13,  2003

                              /s/  Wray  Thompson
                              -------------------
                              Wray  Thompson
                              Chairman  and  Chief  Executive  Officer

                                       21
<PAGE>

EXHIBIT  31.2
-------------
                                  CERTIFICATION

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 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 report;

3.     Based  on  my  knowledge,  the  financial statements, and other financial
information included in this 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  report;

4.     The  registrant's  other  certifying  officer  and  I are responsible for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-15(e)  and  15d-15(e))  for  the  registrant and have:

     a.  Designed  such  disclosure  controls  and  procedures,  or  caused such
disclosure  controls  and  procedures  to  be designed under our supervision, to
ensure  that  material  information  relating  to  the registrant, including its
consolidated  subsidiaries, is made known to us by others within those entities,
particularly  during  the  period  in  which  this  report  is  being  prepared;

     b.  Evaluated the effectiveness of the registrant's disclosure controls and
procedures  and presented in this report our conclusions about the effectiveness
of  the  disclosure controls and procedures, as of the end of the period covered
by  this  report  based  on  such  evaluation;  and

     c. Disclosed in this report any change in the registrant's internal control
over  financial  reporting  that  occurred  during  the registrant's most recent
fiscal  quarter  that  has  materially  affected,  or  is  reasonable  likely to
materially  affect,  the registrant's internal control over financial reporting;
and

5.     The registrant's other certifying officer(s) and I have disclosed, based
on  our  most recent evaluation of internal control over financial reporting, to
the  registrant's  auditors and the audit committee of the registrant's board of
directors  (or  persons  performing  the  equivalent  functions):

     a.  All  significant  deficiencies and material weaknesses in the design or
operation  of  internal  control  over  financial reporting which are reasonably
likely  to  adversely  affect  the  registrant's  ability  to  record,  process,
summarize  and  report  financial  information;  and

     b.  Any  fraud,  whether or not material, that involves management or other
employees  who have a significant role in the registrant's internal control over
financial  reporting.

August  13,  2003

                              /s/  Shannon  L.  Greene
                              ------------------------
                              Shannon  L.  Greene
                              Chief  Financial  Officer  and  Treasurer

                                       22
<PAGE>

EXHIBIT  32
-----------


                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  June  30,  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.


     August  13,  2003               By:  /s/  Wray  Thompson
                                          -------------------
                                          WRAY  THOMPSON
                                          CHAIRMAN AND CHIEF EXECUTIVE OFFICER


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