Our tannery gives this advice on caring for sheepskins:
Wash skin in 80 degree water with mild liquid detergent in gentle cycle. Some customers add a teaspoon of olive oil to rinse bath. Spin out excess water. Hang dry in room temperature, indoors. While it is still a little damp, occasionally stretch the hide from side to side to help open up the leather. If the hide is too wet, the stretching will not accomplish anything. When the hide is damp, stretching will open up the leather and the leather will lighten in color and become soft. If the hide becomes too dry prior to stretching, lightly moisten the leather with water, and fold the hide leather to leather. Once the leather becomes damp, stretching can be done.