Allied Stores agreed to sell its Blocks division.

Allied, which was acquired last year by Campeau Corp. of Toronto, is selling the 12 stores in its Blocks Inc. division to Federated Department Stores for $55 million. Federated said it planned to operate the stores--which include 10 Blocks stores in Indiana and Ohio and two Herpolsheimer’s stores in Michigan--as part of its Lazarus department store division. The stores will retain their current names at least for the time being, said Carol Sanger, a Federated spokeswoman.