By Anuja Bharat Mistry

Nov 6 (Reuters) - Elf Beauty ( ELF ) raised its

forecasts for annual sales and profit on Wednesday, betting on

its efforts to sell cosmetics such as lip oil and liquid blush

at affordable price points in the U.S. and abroad.

Customers, who have been hunting for lower-priced makeup and

skincare products, have helped in boosting Elf's sales in a

challenging market where major beauty brands like Estee Lauder ( EL )

and L'Oreal have been wrestling to lift demand.

Elf expects net sales in the range of $1.32 billion to 1.34

billion, compared with its prior forecast of $1.28 billion to

$1.30 billion.

Elf's strategy of introducing "dupes" of luxury cosmetics

and pricing its products between $2 and $10 has further

bolstered demand.

The California-based company has also expanded product

offerings to mass retailers such as Walmart ( WMT ), Target ( TGT )

and Amazon.com ( AMZN ) helping it reach a wider

customer base.

Price increases in international markets such as India and

Germany and efficient cost-saving measures helped the company

grow its gross margin by 40 basis points to 71% during the

second quarter.

Elf has a broad appeal across all income groups, CEO Tarang

Amin told Reuters, adding that the company's "strategy is to

have the highest quality at an acceptable price or at an

extraordinary price."

It expects annual adjusted earnings per share between

$3.47 and $3.53, up from its prior range of $3.36 to $3.41 per

share.

Net sales came in at $301.1 million for the quarter

ended Sept. 30, compared with analysts' average estimates of

$285.8 million, as per data compiled by LSEG.

On an adjusted basis, it earned a profit of 77 cents per

share, beating analysts' estimates of 43 cents per share.