Spain is known for its leather, but mostly in the South of Spain---most notably Sevilla. Buyers beware though, if you were in Italy four years ago, you would have been using the lira, which was sooo cheap. Now they're on the Euro, so anything will cost you a lot more.
I agree with Jennie - Spanish leather goods are outstanding. Some of the best and longest-lasting leather shoes that I ever bought were purchased in Madrid and Barcelona. If the price is within your means, I wouldn't hesitate one second about buying leather goods in Spain.
El Corte Ingles is the Dept Store that Jennie was referring to, there is one in Barcelona at the top of Las Ramblas(opposite end to the port)
You will pay a bit more in there, but the quality of their merchandise is superb