A number of sources, from Fitch Ratings to UBS, have decided that it's time for investors to get out of department stores. The argument is that customers are trending more toward specialty retailers, and that the benefit well for department store stocks is all but dried up. Other observers aren't sold on the idea, though, and the National Retail Federation ranks among the skeptics. Daniel Butler, a VP of retail operations with the Federation, said that department stores are actually outperforming the retail sector overall.

For investors, it may simply be a matter of being more selective. The range of department stores and performances is broad, so here are three of the bigger players, and how they stack up against one another.

J.C. Penney
At the bottom of the pile is J.C. Penney (NYSE:JCP). I vacillate between thinking that J.C. Penney is about to go out of business and take everyone down with it and thinking that it's about to go out of business but liquidate its real estate to generate some value for investors. Either way, things at the retailer are not working out. Last quarter, both net sales and comparable sales were down more than 16%. The company's loss per share doubled from the quarter last year.

With a new CEO, J.C. Penney is trying to refocus on its core customers and make amends for past grievances. Even with the current work, it seems unlikely that the company is going to hit neutral anytime in the near future. Sales decreases are so deep that management is going to have to continue spending more than it makes just to get people in the doors. Even with the potential upside in real estate, I just can't get behind J.C. Penney

At the higher end of the department store scale, Nordstrom (NYSE:JWN) is having a hit-and-miss run. The latest earnings announcement came in under expectations, but the company is still on track to hit its 2013 full-year goals. The company fell short of earnings and comparable sales expectations, but it hasn't lost its focus on customers.

While the focus is still there, I think the slip is indicative of Nordstrom's over-focusing on its Rack brand. The line has sucked up cash, and the push to add new locations may have decreased the focus on sales at Rack. Comparable sales were only up 0.8%, which is not going to sustain the growth that the company needs. I like Nordstrom, but there are still growing pains to overcome.

The middle ground in the department store sector is firmly held by Macy's (NYSE:M). The position gives the company a lot of leeway in its pricing and branding, and that flexibility has given Macy's an upper hand recently. Last quarter, comparable sales were up 3.8% and earnings per share rose 28%. The results were part of an ongoing trend at Macy's, and the company's stock is up 37% over the last 12 months.

If you're looking for the key to success, look no further than the omnichannel plan that Macy's has undertaken. The company is increasing the ways and means that it uses to fulfill customer orders and keep stock on the shelves. Right now, the focus is on shipping items directly from stores to customers and other stores. This has allowed the company to complete more sales, and keep customers interested in the brand. For all these reasons, Macy's is my pick of the litter.

Fool contributor Andrew Marder has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.