Specialty retailer Gap Inc. (GPS) announced its April as well as Q1 2012 sales last Thursday.

While the company's performance dipped in April with a 2% decline in comparable sales, Gap ended its first-quarter of 2012 on a positive note with a 4% increase in comps and a 6% increase in net sales.

We believe the Q1 sales results are quite impressive when compared on a quarter-over-quarter​ basis, and reflect a slow but steady turnaround for the San Francisco apparel retailer.

Gap competes with other specialty retailers like Aeropostale (ARO), American Eagle (AEO), Abercrombie & Fitch (ANF) and Urban Outfitters (URBN).

Gap's Q1 2012 sales sounds impressive

For the first quarter ended April 28, 2012, Gap reported a 4% rise in comparable store sales against a 3% decline in the first quarter of 2011. Additionally, the company's net sales also jumped by a solid 6%, compared to that in Q1 last year. The increase in both comparable store sales and net sales reflect Gap's focus on maintaining balance in its Spring merchandise, and an improvement in consumer confidence due to the gradually improving macro-economic conditions.

While Gap did stumble in April with a comparable sales decline of 2%, we believe short-term factors, such as early Easter holiday and a cold April, were primarily behind the decline. We don't see these factors bothering the company going ahead, and that justifies our positive near-term outlook on Gap's stock.

Talking in terms of brands, both Gap and Banana Republic continue to perform strongly, with comparable sales growth of 4% and 1% respectively in April. However, Old Navy still remains the weakest brand of Gap Inc., with a comparable sales decline of 6% in April against a 11% comp sales growth in March 2012.

We have a Trefis price estimate of $29.89 for Gap's stock -- a premium of around 6% to the current market price.

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