<PAGE>
 
                                                                    Exhibit 10.8
                                PARENT GUARANTY
                                ---------------
                                        

          This PARENT GUARANTY (as it may be amended, supplemented or otherwise
modified from time to time, this "Guaranty") is dated as of May 25, 1996, by
WILSONS THE LEATHER EXPERTS INC., a Minnesota corporation ("Newco"), WILSONS
CENTER, INC., a Minnesota corporation ("Parent"), ROSEDALE WILSONS, INC., a
Minnesota corporation ("First Intermediate Parent"), and RIVER HILLS WILSONS,
INC., a Minnesota corporation ("Second Intermediate Parent") (Newco, Parent,
First Intermediate Parent and Second Intermediate Parent are individually
referred to as a "Guarantor" and together as the "Guarantors"), in favor of
GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation, as agent ("Agent")
on its behalf and for the ratable benefit of the Lenders.

          WHEREAS, Newco is the legal and beneficial owner of all of the issued
and outstanding capital stock of Parent which in turn owns all of the issued and
outstanding capital stock of First Intermediate Parent which in turn owns all of
the issued and outstanding capital stock of Second Intermediate Parent;

          WHEREAS, Second Intermediate Parent owns all of the issued and
outstanding capital stock of (i) Borrower, (ii) House of Suede; (iii) Bermans;
(iv) Tannery; (v) the Individual Store Subsidiaries; and (vi) the Georgetown
Subsidiaries;

          WHEREAS, Agent and the Lenders have entered into that certain Credit
Agreement of even date herewith (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement")
with Wilsons Leather Holdings Inc., a Minnesota corporation ("Borrower"), and
certain of Borrower's corporate Affiliates;

          WHEREAS, Borrower will become liable for the Obligations, including,
without limitation, loans and other financial accommodations from the Lenders
(including Agent in its individual capacity) under the Credit Agreement;

          WHEREAS, the Guarantors will derive substantial direct and indirect
benefit and advantage from the financial accommodations to Borrower set forth in
the Credit Agreement, including the loans and advances made to Borrower
thereunder, and it will be to the Guarantors direct and indirect interest and
economic benefit to assist Borrower in procuring such financial accommodations
from the Lenders; and

          WHEREAS, a condition to Agent and the Lenders entering into the Credit
Agreement is that the Guarantors execute and deliver this Guaranty;

          NOW, THEREFORE, in consideration of the premises and in order to
induce Agent and the Lenders to enter into the Credit Agreement and the Lenders
to make loans thereunder, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Guarantors hereby
agree as follows:
<PAGE>
 
          SECTION 1.  Definitions.
                      ----------- 

          Unless otherwise defined herein, all capitalized terms used herein
shall have the respective meanings assigned to such terms in Schedule A to the
Credit Agreement.

          SECTION 2.  Guaranty of Payment.
                      ------------------- 

          (a)  The Guarantors hereby absolutely and unconditionally guarantee
the full and prompt payment to Agent, for its benefit and the ratable benefit of
the Lenders, when due, whether upon demand, at maturity or by reason of
acceleration or otherwise and at all times thereafter, of any and all existing
and future Obligations.

          (b)  The Guarantors acknowledge that valuable consideration supports
this Guaranty, including, without limitation, the consideration set forth in the
recitals above as well as any commitment to lend, extension of credit or other
financial accommodation, whether heretofore or hereafter made by the Lenders to
Borrower, any extension, renewal or replacement of any of the Obligations; any
forbearance with respect to any of the Obligations or otherwise; any purchase of
Borrower's assets by the Lenders; or any other valuable consideration.

          (c)  The Guarantors agree that all payments under this Guaranty shall
be made in United States currency and in the same manner as provided for the
Obligations.

          SECTION 3.  Costs and Expenses.
                      ------------------ 

          The Guarantors agree to pay on demand, if not paid by Borrower, all
costs and expenses of every kind incurred by Agent or the Lenders:  (a) in
enforcing this Guaranty, (b) in collecting any of the Obligations from Borrower
or the Guarantors, (c) in realizing upon or protecting any collateral for this
Guaranty or for payment of any of the Obligations and (d) for any other purpose
related to the Obligations or this Guaranty.  "Costs and expenses" as used in
the preceding sentence shall include, without limitation, reasonable attorneys'
fees incurred by Agent or, to the extent provided in the Credit Agreement, any
Lender in retaining counsel for advice, suit, appeal, any insolvency or other
proceedings under the United States Bankruptcy Code or otherwise, or for any
purpose specified in the preceding sentence.

          SECTION 4.  Nature of Guaranty:  Continuing, Absolute and
                      ---------------------------------------------
                      Unconditional.
                      -------------- 

          (a)  This Guaranty is and is intended to be a continuing guaranty of
payment of the Obligations, independent of and in addition to any other
guaranty, endorsement, collateral or other agreement held by Agent or the
Lenders therefor or with respect thereto, whether or not furnished by the
Guarantors.  The obligations of the Guarantors to repay the Obligations
hereunder shall be unlimited.

          (b)  Until the Obligations have been paid in full, the Guarantors
shall have no right, claim or remedy of subrogation, reimbursement, contribution
or any similar rights against Borrower or any other guarantor with respect to
the Obligations and hereby waive any right to enforce any remedy which Agent or
any Lender now has or may hereafter have against Borrower, any endorser or any
other guarantor of all or any part of the Obligations, and the Guarantors

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<PAGE>
 
hereby waive any benefit of, and any right to participate in, any security or
collateral given to Agent, on behalf of the Lenders, to secure payment of the
Obligations or any part thereof or any other liability of Borrower to Agent or
the Lenders.  If any amount shall be paid to the Guarantors on account of any
payment made hereunder at any time when the Obligations shall not have been paid
in full, such amount shall be held in trust for the benefit of Agent and the
Lenders and shall forthwith be paid to Agent to be credited and applied, whether
the Obligations are matured or unmatured, in accordance with the terms of the
Credit Agreement.  The Guarantors authorize Agent, on behalf of the Lenders, to
take any action or exercise any remedy with respect to the Collateral which
Agent, on behalf of the Lenders, in its sole discretion shall determine, without
notice to the Guarantors.  The Guarantors further agree that any and all claims
of any Guarantor against Borrower, any endorser or any other guarantor of all or
any part of the Obligations, or against any of their respective properties,
whether arising by reason of any payment by any Guarantor to Agent, on behalf of
the Lenders, pursuant to the provisions hereof, or otherwise, shall be
subordinate and subject in right of payment to the prior payment, in full, of
any and all principal and interest, all fees, all reasonable costs of collection
(including reasonable attorneys' fees and time charges) and any other
liabilities or obligations owing to the Lenders by Borrower which may arise
either with respect to or on any note, instrument, document, item, agreement or
other writing heretofore, now or hereafter delivered to any Lender or Agent.  In
the event Agent, on behalf of the Lenders, in its sole discretion elects to give
notice of any action with respect to the Collateral securing the Obligations or
any part thereof, ten (10) days' written notice mailed to the Guarantors by
ordinary mail at the address shown hereon shall be deemed reasonable notice of
any matters contained in such notice.  The Guarantors consent and agree that
Agent, on behalf of the Lenders, shall be under no obligation to marshall any
assets in favor of the Guarantors or against or in payment of any or all of the
Obligations.

          (c)  For the further security of the Lenders and without in any way
diminishing the liability of the Guarantors, following the occurrence of an
Event of Default and acceleration of the Obligations of Borrower, all debts and
liabilities, present or future of Borrower to any Guarantor and all monies
received from Borrower or for its account by any Guarantor in respect thereof
shall be received in trust for the Lenders and forthwith upon receipt shall be
paid over to Agent, for the benefit of the Lenders, until all of such
Obligations have been paid in full.

          (d)  This Guaranty and the Guarantors' obligations hereunder are
absolute and unconditional and shall not be changed or affected by any
representation, oral agreement, act or thing whatsoever, except as herein
provided.  This Guaranty is intended by the Guarantors to be the final, complete
and exclusive expression of the guaranty agreement between the Guarantors and
Agent, on behalf of the Lenders.  No modification or amendment of any provision
of this Guaranty shall be effective unless in writing and signed by a duly
authorized officer of Agent, on its behalf and the ratable benefit of the
Lenders.

          SECTION 5.  Certain Rights and Obligations.
                      ------------------------------ 

          (a)  The Guarantors authorize Agent and the Lenders, without notice,
demand or any reservation of rights against the Guarantors and without impairing
or affecting the validity or enforceability of this Guaranty or the Guarantors'
obligations hereunder, from time to time:  (i) to renew, extend, increase,
accelerate or otherwise change the time for payment of, the terms

                                      -3-
<PAGE>
 
of or the interest on the Obligations or any part thereof or grant other
indulgences to Borrower or others; (ii) to accept from any Person and hold
collateral for the payment of the Obligations or any part thereof, and to
modify, exchange, enforce or refrain from enforcing, or release, compromise,
settle, waive, subordinate or surrender, with or without consideration, such
collateral or any part thereof, (iii) to accept and hold any endorsement or
guaranty of payment of the Obligations or any part thereof, and to discharge,
release or substitute any such obligation of any such endorser or guarantor, or
any Person who has given any security interest in any collateral as security for
the payment of the Obligations or any part thereof, or any other Person in any
way obligated to pay the Obligations or any part thereof, and to enforce or
refrain from enforcing, or compromise or modify, the terms of any obligation of
any such endorser, guarantor or Person; (iv) to dispose of any and all
Collateral securing the Obligations in any manner as Agent or the Lenders, in
their sole discretion, may deem appropriate, and to direct the order or manner
of such disposition and the enforcement of any and all endorsements and
guaranties relating to the Obligations or any part thereof as Agent or the
Lenders, in their sole discretion may determine; (v) except as otherwise
provided in the Credit Agreement, to determine the manner, amount and time of
application of payments and credits, if any, to be made on all or any part of
any component or components of the Obligations (whether principal, interest,
fees, costs and expenses, or otherwise) including, without limitation, the
application of payments received from any source to the payment of indebtedness
other than the Obligations even though the Lenders might lawfully have elected
to apply such payments to the Obligations or to amounts which are not covered by
this Guaranty; and (vi) to take advantage or refrain from taking advantage of
any security or accept or make or refrain from accepting or making any
compositions or arrangements when and in such manner as Agent or the Lenders, in
their sole discretion, may deem appropriate and generally do or refrain from
doing any act or thing which might otherwise, at law or in equity, release the
liability of the Guarantors as guarantors or sureties in whole or in part, and
in no case shall Agent or the Lenders be responsible or shall the Guarantors be
released either in whole or in part for any act or omission in connection with
Agent or the Lenders having sold any security at an under value.

          (b)  If any default shall be made in the payment of any of the
Obligations and any grace period has expired with respect thereto, the
Guarantors hereby agree to pay the same in full to the extent hereinafter
provided:  (i) without deduction by reason of any setoff, defense (other than
payment) or counterclaim of Borrower; (ii) without requiring presentment,
protest or notice of nonpayment or notice of default to any Guarantor, to
Borrower or to any other Person; (iii) without demand for payment or proof of
such demand or filing of claims with a court in the event of receivership,
bankruptcy or reorganization of Borrower; (iv) without requiring Agent or the
Lenders to resort first to Borrower (this being a guaranty of payment and not of
collection) or to any other guarantor or any other Person obligated with respect
to the Obligations or any collateral which the Lenders may hold; (v) without
requiring notice of acceptance hereof or assent hereto by Agent or the Lenders;
and (vi) without requiring notice that any of the Obligations has been incurred,
extended or continued or of the reliance by Agent or the Lenders upon this
Guaranty; all of which the Guarantors hereby waive.

          (c)  This Guaranty and the Guarantors' obligation hereunder shall at
all times be valid and enforceable and shall not be impaired or affected by any
other agreements or circumstances of any nature whatsoever which otherwise
constitute a defense to this Guaranty,

                                      -4-
<PAGE>
 
including, without limitation, any of the following, all of which the Guarantors
hereby waive:  (i) any failure or omission to perfect or continue the perfection
of any security interest in or other lien on, or preserve rights to, any
collateral securing payment of any of the Obligations or the Guarantors'
obligation hereunder, (ii) the invalidity, unenforceability, propriety of manner
of enforcement of, or loss or change in priority of any such security interest
or other lien or guaranty of the Obligations; (iii) any failure or omission to
protect, preserve or insure any such collateral; (iv) failure of any Guarantor
to receive notice of any intended disposition of such collateral; (v) any
defense arising by reason of the cessation from any cause whatsoever of
liability of Borrower including, without limitation, any failure, negligence or
omission by Agent or the Lenders in enforcing their claims against Borrower,
(vi) any waiver of any right, remedy or power or of any default with respect to
the Obligations or any part thereof or any release, settlement or compromise of
any obligation of Borrower; (vii) the invalidity or unenforceability of any of
the Obligations or the invalidity or unenforceability of any agreement relating
thereto or with respect to any collateral securing the Obligations or any part
thereof; (viii) any change of ownership of Borrower or the insolvency,
bankruptcy or any other change in the legal status of Borrower, (ix) any change
in, or the imposition of, any law, decree, regulation or other governmental act
which does or might impair, delay or in any way affect the validity,
enforceability or the payment when due of the Obligations; (x) the existence of
any claim, setoff or other right which the Guarantors may have at any time
against Agent, any Lender, Borrower or any other guarantor in connection
herewith or any unrelated transaction; (xi) the failure of Borrower or the
Guarantors to maintain in full force, validity or effect or to obtain or renew
when required all governmental and other approvals, licenses or consents
required in connection with the Obligations or this Guaranty, or to take any
other action required in connection with the performance of all obligations
pursuant to the Obligations or this Guaranty; (xii) Agent's election, on behalf
of the Lenders, in any case instituted under chapter 11 of the United States
Bankruptcy Code, of the application of section 1111(b)(2) of the United States
Bankruptcy Code; (xiii) any borrowing, use of cash collateral or grant of a
security interest by Borrower, as Borrower in possession, under section 363 or
364 of the United States Bankruptcy Code; (xiv) the disallowance of all or any
portion of any of the Lenders' claims for repayment of the Obligations under
section 502 or 506 of the United States Bankruptcy Code; or (xv) any other fact
or circumstance which might otherwise constitute grounds at law or in equity for
the discharge or release of any Guarantor from its obligations hereunder, all
whether or not the Guarantors shall have had notice or knowledge of any act or
omission referred to in the foregoing clauses (i) through (xv) of this
subsection 5(c).  It is agreed that the Guarantors' liability hereunder is
independent of any other guaranties or other obligations at any time in effect
with respect to the Obligations or any part thereof and that the Guarantors'
liability hereunder may be enforced regardless of the existence, validity,
enforcement or non-enforcement of any such other guaranties or other obligations
or any provision of any applicable law or regulation purporting to prohibit
payment by Borrower of the Obligations in the manner agreed upon between the
Lenders and Borrower.

          (d)  Credit may be granted or continued from time to time by the
Lenders to Borrower without notice to or authorization from the Guarantors
regardless of Borrower's financial or other condition at the time of any such
grant or continuation.  Neither Agent nor any Lender shall have an obligation to
disclose or discuss with the Guarantors its assessment of the financial
condition of Borrower.

                                      -5-
<PAGE>
 
          SECTION 6.  Representations and Warranties.
                      ------------------------------ 

          The Guarantors represent and warrant that:

          (a)  Existence.  The Guarantors and their Subsidiaries (i) are
corporations duly organized, validly existing and in good standing under the
laws of their respective jurisdiction of incorporation and have been duly
qualified to conduct business and are in good standing in each other
jurisdiction where their ownership or lease of property or the conduct of their
business require such qualification except where the failure to so qualify would
not have a Material Adverse Effect; (ii) have the requisite corporate power and
authority and the legal right to own, pledge, mortgage or otherwise encumber and
operate their properties, to lease the property they operate under lease and to
conduct their business as now, heretofore and proposed to be conducted; (iii)
have all material licenses, permits, consents or approvals from or by, and have
made all filings with, and have given all notices to, all Governmental
Authorities having jurisdiction, to the extent required for such ownership,
operation and conduct; (iv) are in compliance with their respective certificate
or articles of incorporation and bylaws; and (v) are in compliance with all
applicable provisions of law except where the failure to so be in compliance
would not have a Material Adverse Effect.

          (b)  Authority.  The Guarantors have full power, authority and legal
right to enter into this Guaranty and the other Loan Documents to which they are
parties.  The execution, delivery and performance by the Guarantors of this
Guaranty and such other Loan Documents: (i) have been duly authorized by all
necessary action on the part of the Guarantors; (ii) are not in contravention of
the terms of each Guarantor's respective certificate of incorporation or bylaws
or of any indenture, agreement or undertaking to which each Guarantor is a party
or by which each Guarantor or any of its property is bound; (iii) do not and
will not require any governmental consent, registration or approval or the
consent of any other Person that has not been obtained; (iv) do not and will not
contravene any contractual or governmental restriction to which any Guarantor or
any of its property may be subject; and (v) do not and will not, except as
contemplated herein, result in the imposition of any Lien upon any property of
any Guarantor under any existing indenture, mortgage, deed of trust, loan or
credit agreement or other material agreement or instrument to which any
Guarantor is a party or by which any Guarantor or any of its property may be
bound or affected.

          (c)  Binding Effect.  This Guaranty and all of the other Loan
Documents to which the Guarantors are a party have been duly executed and
delivered by each Guarantor, are the legal, valid and binding obligations of
each Guarantor and are enforceable against each Guarantor in accordance with
their terms.

          (d)  Negative Pledge.  The Guarantors are not a party to or bound by
any indenture, contract, instrument or other agreement which prohibits the
creation, incurrence or sufferance to exist of any Lien upon its property,
except the Loan Documents and the Subordinated Note.

          (e)  Survival of Representations and Warranties.  All representations
and warranties contained in this Guaranty or any of the other Loan Documents to
which the

                                      -6-
<PAGE>
 
Guarantors are a party shall survive the execution and delivery of this Guaranty
and the termination hereof.

          (f)  The Guarantors ratify and confirm the representations and
warranties made with respect to them in Section 3 of the Credit Agreement, which
are incorporated herein by reference.

          SECTION 7.  Covenants.
                      --------- 

          The Guarantors covenant that until the Obligations are paid in full
they shall perform, comply with and be bound by all of the terms and conditions
set forth in the Credit Agreement which relate to the Guarantors, including,
without limitation, Schedule E thereto, with such terms and conditions being
incorporated in this Guaranty by reference and shall cause Borrower to comply
with all covenants set forth in the Credit Agreement.

          SECTION 8.  Termination.
                      ----------- 

          This Guaranty shall remain in full force and effect until all of the
Obligations shall be finally and irrevocably paid in full and the Obligations
under the Credit Agreement shall have been terminated.  Payment of all of the
Obligations from time to time shall not operate as a discontinuance of this
Guaranty.  The Guarantors further agree that, to the extent that Borrower makes
a payment or payments to Agent or any of the Lenders on the Obligations, or
Agent or the Lenders receive any proceeds of Collateral securing the
Obligations, which payment or receipt of proceeds or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be returned or repaid to Borrower, its estate, trustee, receiver,
Borrower in possession or any other Person, including, without limitation, any
guarantor, under any insolvency or bankruptcy law, state or federal law, common
law or equitable cause, then to the extent of such payment, return or repayment,
the obligation or part thereof which has been paid, reduced or satisfied by such
amount shall be reinstated and continued in full force and effect as of the date
when such initial payment, reduction or satisfaction occurred, and this Guaranty
shall continue in full force notwithstanding any contrary action which may have
been taken by the Lenders in reliance upon such payment, and any such contrary
action so taken shall be without prejudice to Agent's or the Lenders' rights
under this Guaranty and shall be deemed to have been conditioned upon such
payment having become final and irrevocable.

          SECTION 9.  Guaranty of Performance.
                      ----------------------- 

          The Guarantors also guarantee the full, prompt and unconditional
performance of all obligations and agreements of every kind owed or hereafter to
be owed by any Guarantor or Borrower to Agent or the Lenders.  Every provision
for the benefit of Agent or the Lenders contained in this Guaranty shall apply
to the guaranty of performance given in this Section 9.

          SECTION 10.  Taxes.
                       ----- 

          All payments hereunder shall be made without any counterclaim or
setoff, free and clear of, and without reduction by reason of, any taxes,
levies, imposts, charges and withholdings, restrictions or conditions of any
nature other than taxes imposed on the net income of Agent or a

                                      -7-
<PAGE>
 
Lender ("Taxes"), which are now or may hereafter be imposed, levied or assessed
by any country, political subdivision or taxing authority, all of which will be
for the account of and paid by the Guarantors.  If for any reason, any such
reduction is made or any Taxes are paid by the Lender, the Guarantors will pay
to Agent, for the benefit of the Lenders, such additional amounts as may be
necessary to ensure that Agent, and the Lenders receive the same net amount
which they would have received had no reduction been made or Taxes paid.

          SECTION 11.  Security.
                       ---------

          To secure payment of the Guarantors' obligations under this Guaranty,
concurrently with the execution of this Guaranty: (a) the Guarantors are
entering into a Security Agreement pursuant to which they have granted to Agent
a security interest in all or substantially all of their respective personal
property other than fixtures and equipment and (b)(i) Newco is entering into a
pledge agreement granting to Agent, for its benefit and the ratable benefit of
the Lenders, a first Lien or all of the capital stock of Parent; (ii) Parent is
entering into a pledge agreement granting to Agent, for its benefit and the
ratable benefit of the Lenders, a first Lien on all of the capital stock of
First Intermediate Parent; (iii) First Intermediate Parent is entering into a
pledge agreement granting to Agent, for its benefit and the ratable benefit of
the Lenders, a first Lien on all of the capital stock of Second Intermediate
Parent; and (iv) Second Intermediate Parent entering into a pledge agreement
granting to Agent, for its benefit and the ratable benefit of the Lenders, a
first Lien on all of the capital stock of Bermans, House of Suede and Borrower.

          SECTION 12.  Miscellaneous.
                       --------------

          (a)  In addition to and without limiting any other right, power or
remedy of Agent or any Lender, whenever Agent or the Lenders have the right to
declare any of the Obligations to be immediately due and payable (whether or not
it has been so declared), the Lenders at their sole election without notice to
the Guarantors may appropriate and setoff against the Obligations: (i) any and
all indebtedness or other monies due or to become due to any Guarantor by Agent
or the Lenders in any capacity; and (ii) any monies, credits or other property
belonging to any Guarantor (including all account balances, whether provisional
or final and whether or not collected or available) at any time held by or
coming into the possession of Agent or any of the Lenders, or any affiliate of
Agent or any of the Lenders, whether for deposit or otherwise, whether or not
the Obligations or the obligation to pay such monies owed by Agent or the
Lenders is then due, and Agent, on behalf of the Lenders, is hereby granted a
security interest in and Lien upon such monies, credits and other property.
Agent or the Lenders shall be deemed to have exercised such right of setoff
immediately at the time of such election even though any charge therefor is made
or entered on Agent's or the Lenders' records subsequent thereto.

          (b)  In the event that acceleration of the time for payment of any of
the Obligations is stayed, upon the insolvency, bankruptcy or reorganization of
Borrower, or otherwise, all such amounts shall nonetheless be payable by the
Guarantors forthwith upon demand by Agent, on behalf of the Lenders.

          (c)  No delay on the part of Agent or any Lender in the exercise of
any right, power or remedy shall operate as a waiver thereof, and no single or
partial exercise by Agent or

                                      -8-
<PAGE>
 
any Lender of any right, power or remedy shall preclude any further exercise
thereof; nor shall any amendment, supplement, modification or waiver of any of
the terms or provisions of this Guaranty be binding upon Agent or the Lenders,
except as expressly set forth in a writing duly signed and delivered by Agent.
The failure by Agent or any Lender at any time or times hereafter to require
strict performance by Borrower or any Guarantor of any of the provisions,
warranties, terms and conditions contained in any promissory note, security
agreement, agreement, indenture, guaranty, instrument or document now or at any
time or times hereafter executed by Borrower or any Guarantor and delivered to
Agent or any Lender shall not waive, affect or diminish any right of Agent or
any Lender at any time or times hereafter to demand strict performance thereof,
and such right shall not be deemed to have been waived by any act or knowledge
of Agent or any Lender, their agents, officers or employees, unless such waiver
is contained in an instrument in writing duly signed and delivered by Agent
and/or the Lenders, as the case may be.  No waiver by Agent or the Lenders of
any default shall operate as a waiver of any other default hereunder or the same
default on a future occasion, and no action by Agent or the Lenders permitted
hereunder shall in any way affect or impair Agent's or any Lender's rights,
powers or the obligations of any Guarantor under this Guaranty.  Any
determination by a court of competent jurisdiction of the amount of any
Obligations owing by Borrower to the Lenders shall be conclusive and binding on
the Guarantors irrespective of whether Borrower was a party to the suit or
action in which such determination was made.  The rights and remedies of Agent
and the Lenders hereunder are cumulative and may be exercised singly or
concurrently, and are not exclusive of any rights or remedies provided by law.

          (d)  This Guaranty shall bind each Guarantor and the successors and
assigns of each Guarantor and shall inure to the benefit of Agent and the
Lenders and their successors and assigns.  All references herein to Borrower
shall be deemed to include its successors and assigns including, without
limitation, a receiver, trustee or Borrower in possession of or for Borrower.

          (e)  Section headings in this Guaranty are included herein for
convenience of reference only and shall not constitute a part of this Guaranty
for any other purpose or be given any substantive effect.

          (f)  Whenever possible, each provision of this Guaranty shall be
interpreted in such manner as to be effective and valid under applicable law.
Any provision of this Guaranty which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remainder of such
provision or the remaining provisions of this Guaranty, and any such prohibition
or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

          (g)  It is understood that while the amount of the Obligations is not
limited, if, in any action or proceeding involving any state or federal
bankruptcy, insolvency or other law affecting the rights of creditors generally,
this Guaranty would be held or determined to be void, invalid or unenforceable
on account of the amount of the aggregate liability under this Guaranty, then,
notwithstanding any other provision of this Guaranty to the contrary, the
aggregate amount of such liability shall without any further action of the
Guarantors, the Lenders, Agent or any

                                      -9-
<PAGE>
 
other Person, be automatically limited and reduced to the highest amount which
is valid and enforceable as determined in such action or proceeding.

          (h)  This Guaranty sets forth the entire understanding and agreement
of the Guarantors and Agent with respect to the subject matter hereof and
supersedes all other understandings, oral or written, with respect to the
subject matter hereof.

          (i)  The Guarantors agree to pay all costs, reasonable fees and
expenses (including reasonable attorneys' fees) incurred by Agent or the Lenders
after a default by any Guarantor under this Guaranty.

          (j)  THE GUARANTORS AND AGENT HEREBY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN COOK COUNTY, CITY OF
CHICAGO, ILLINOIS, AND IRREVOCABLY AGREE THAT ALL ACTIONS OR PROCEEDINGS
RELATING TO THIS GUARANTY OR THE OTHER LOAN DOCUMENTS TO WHICH THE GUARANTORS
ARE A PARTY SHALL BE LITIGATED IN SUCH COURTS, AND THE GUARANTORS AND AGENT
WAIVE ANY OBJECTION WHICH THEY MAY HAVE BASED ON IMPROPER VENUE OF FORUM NON
CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT AND EACH WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND CONSENTS THAT ALL SUCH
SERVICE OF PROCESS BE MADE BY REGISTERED OR CERTIFIED MAIL OR MESSENGER DIRECTED
TO IT AT THE ADDRESS SET FORTH IN SECTION 13 HEREOF AND AGREES THAT SUCH SERVICE
SHALL CONSTITUTE SUFFICIENT NOTICE.  NOTHING CONTAINED IN THIS SECTION 12 SHALL
AFFECT THE RIGHT OF AGENT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW OR AFFECT THE RIGHT OF AGENT TO BRING ANY ACTION OR PROCEEDING AGAINST
THE GUARANTORS IN THE COURTS OF ANY OTHER JURISDICTION TO THE EXTENT NECESSARY
TO ENFORCE ITS LIENS AGAINST ASSETS LOCATED IN SUCH JURISDICTION.

          (k)  THIS GUARANTY SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED UNDER
AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS,
WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS.

          SECTION 13.  Notices.
                       ------- 

          Unless otherwise specifically provided herein, any notice or other
communication required or permitted to be given shall be in writing addressed to
the respective party as set forth below and may be personally served, telecopied
or sent by overnight courier service or United States mail certified or
registered and shall be deemed to have been given (a) if delivered in person,
when delivered; (b) if delivered by telecopy, on the date of transmission if
transmitted on a Business Day before 5:00 p.m. (Chicago time) or, if not, on the
next succeeding Business Day; (c) if delivered by overnight courier, two
Business Days after delivery to such courier properly addressed; or (d) if by
United States mail, four Business Days after depositing in the United States
mail, with postage prepaid and properly addressed.

                                      -10-
<PAGE>
 
          Notices shall be addressed as follows:

          (a)  If to Newco:

               Wilsons The Leather Experts Inc.
               400 Highway 169 South, Suite 600
               Minneapolis, Minnesota 55426
               Attention:  _________________
               Telecopy:   _________________

          (b)  If to Parent:

               Wilsons Center, Inc.
               400 Highway 169 South, Suite 600
               Minneapolis, Minnesota 55426
               Attention:  __________________
               Telecopy:   __________________

          (c)  If to First Intermediate Parent:

               Rosedale Wilsons, Inc.
               400 Highway 169 South, Suite 600
               Minneapolis, Minnesota 55426
               Attention:  _________________
               Telecopy:   _________________

          (d)  If to Second Intermediate Parent:

               River Hills Wilsons, Inc.
               400 Highway 169 South, Suite 600
               Minneapolis, Minnesota 55426
               Attention:  _________________
               Telecopy:   _________________

          in each case with copies to:

               Faegre & Benson
               2200 Norwest Center
               Minneapolis, Minnesota 55402
               Attention:  Susan Jacobson
               Telecopy:   (612) 336-3026

          (e)  If to Agent:

               General Electric Capital Corporation
               105 West Madison Street
               Suite 1600

                                      -11-
<PAGE>
 
               Chicago, Illinois 60602
               Attention:  __________________
               Telecopy:   __________________

          with copies to:

               Winston & Strawn
               35 West Wacker Drive
               Chicago, Illinois 60601
               Attention:  David G. Crumbaugh
               Telecopy: 312/558-5700

               and
               ---

               General Electric Capital Corporation
               210 High Ridge Road
               Stamford, Connecticut 06927
               Attention:  Corporate Counsel
               Telecopy:   203/316-7889

or in any case, to such other address as the party addressed shall have
previously designated by written notice to the serving party, given in
accordance with this Section 13.  A notice not given as provided above shall, if
it is in writing, be deemed given if and when actually received by the party to
whom given.

          SECTION 14.  Waivers.
                       ------- 

          (a)  THE GUARANTORS WAIVE THE BENEFIT OF ALL VALUATION, APPRAISAL AND
EXEMPTION LAWS.

          (b)  UPON THE OCCURRENCE OF AN EVENT OF A DEFAULT UNDER THE CREDIT
AGREEMENT, THE GUARANTORS HEREBY WAIVE ALL RIGHTS TO NOTICE AND HEARING OF ANY
KIND PRIOR TO THE EXERCISE BY AGENT OR THE LENDERS OF THEIR RIGHTS TO REPOSSESS
THE COLLATERAL WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE
COLLATERAL WITHOUT PRIOR NOTICE OR HEARING.  THE GUARANTORS ACKNOWLEDGE THAT
THEY HAVE BEEN ADVISED BY COUNSEL OF THEIR CHOICE WITH RESPECT TO THIS
TRANSACTION AND THIS GUARANTY.

          (c)  THE GUARANTORS AND AGENT ACKNOWLEDGE THAT THE TIME AND EXPENSE
REQUIRED FOR TRIAL BY JURY EXCEED THE TIME AND EXPENSE REQUIRED FOR A BENCH
TRIAL AND HEREBY WAIVE, TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY, ANY
OBJECTION BASED ON FORUM NON CONVENIENS, ANY OBJECTION TO VENUE OF ANY ACTION
INSTITUTED HEREUNDER, AND WAIVE ANY BOND OR SURETY OR SECURITY

                                      -12-
<PAGE>
 
UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF AGENT OR THE
LENDERS.

          (d)  THE GUARANTORS ABSOLUTELY, UNCONDITIONALLY AND IRREVOCABLY WAIVE
ANY RIGHT TO ASSERT ANY DEFENSE (OTHER THAN PAYMENT), SETOFF, COUNTERCLAIM OR
CROSSCLAIM OF ANY NATURE WHATSOEVER WITH RESPECT TO THIS GUARANTY OR THE
OBLIGATIONS OF ANY GUARANTOR THEREUNDER OR THE OBLIGATIONS OF ANY OTHER PERSON
OR PARTY INCLUDING BORROWER) RELATING TO THIS GUARANTY, THE OBLIGATIONS OR THE
OBLIGATIONS OF ANY GUARANTOR IN ANY ACTION OR PROCEEDING BROUGHT BY THE LENDERS
TO COLLECT THE OBLIGATIONS OR TO ENFORCE THE OBLIGATIONS OF ANY GUARANTOR.

                            [signature page follows]

                                      -13-
<PAGE>
 
          IN WITNESS WHEREOF, this Guaranty has been executed as of the day
first written above.

                              WILSONS THE LEATHER EXPERTS INC.

                              By:  _________________________________

                              Name:  _______________________________

                              Title:  ______________________________


                              WILSONS CENTER, INC.

                              By:  _________________________________

                              Name:  _______________________________

                              Title:  ______________________________


                              ROSEDALE WILSONS, INC.

                              By:  _________________________________

                              Name:  _______________________________

                              Title:  ______________________________


                              RIVER HILLS WILSONS, INC.

                              By:  _________________________________

                              Name:  _______________________________

                              Title:  ______________________________

                                      -14-