* Company updates on trading ahead of bid deadline
* Eight week Argos like-for-like sales down 1.1 pct
* Cash balance at end 2015 100 mln ahead of forecasts
* CEO says extra value generated in quarter (Releads, adds CEO comments, analyst reaction, shares)
By Paul Sandle
LONDON, March 10 (Reuters) - British takeover target HomeRetail reported improved trading at its Argos storesand a bigger-than-expected cash pile on Thursday, a week beforea deadline for bids.
Supermarket group Sainsbury's and South Africa'sSteinhoff International are pursuing Home Retail,which said sales at Argos stores open for more than a year fellby 1.1 percent in the last eight weeks of its financial year toFeb. 27, an improvement on a 2.6 percent drop for the year.
Chief Executive John Walden said both bids were"interesting", but Home Retail's board needed to receive thembefore it could express a preference.
"We need to wait and understand whether there are firmoffers forthcoming, and then we'll figure out a process," hesaid.
Argos' total sales rose 1.9 percent to 515 million pounds ($733 million) in the period, the company said in a statement,as demand for furniture and sports goods offset lower electricalproduct sales.
Like-for-like sales were impacted by the opening of 90 netnew stores over the year, it said.
Walden said he was pleased with the improvement in Argos'sales performance and the progress the group was making online.
Sales through Internet channels, including reserving itemsfor store collection and same-day home delivery, grew 13percent, representing just over half of total Argos sales.
The group ended 2015 with underlying cash of 310 millionpounds on its balance sheet, ahead of analyst forecasts by 100million pounds. It said net cash at the end of its financialyear was around 625 million pounds, including disposal proceeds.
"That's clear value that any buyer's going to getimmediately, so you would certainly think we have successfullyadded more value to the business in the last quarter," Waldentold reporters.
Last month Sainsbury's had a 1.3 billion pounds bid for HomeRetail trumped by Steinhoff. Both suitors have been given untilMarch 18 to formalise their offers.
Shares in Home Retail, which have jumped by more than 75percent since news of a possible bid from Sainsbury emerged onJan. 5, were trading up 0.1 percent at 180 pence.
Analyst David Jeary at Canaccord Genuity noted thatSteinhoff's 175 pence-a-share offer was currently aboveSainsbury's mixed shares and cash offer, but below the marketprice, indicating a higher bid was expected.
"With the shares trading above the Steinhoff offer, themarket is clearly discounting an increased bid (or bids)."
Under UK takeover rules, whichever company bids firsttriggers a 53-day extension for their rival, effectivelycreating a "game of chicken" as each weighs up a bid.
Home Retail completed the 340 million pounds disposal of itsHomebase home improvement business to Australian groupWesfarmers last month, leaving it with just the Argosbusiness.
The company said it was on track to report profit before taxin line with market expectations of 93 million pounds. ($1 = 0.7029 pounds) (Editing by Sarah Young and Alexander Smith)
Sainsbury's (SBRY)
Home Reit (HOME)
