NEW YORK (CNNMoney.com) -- Best Buy said Tuesday that abundant supply and falling prices of flatscreen TVs should ensure robust sales of the product during the crucial holiday season and help to offset cooling demand of the once red-hot MP3 category.

Over the past two years, flatscreen TVs and MP3 products such as Apple (Charts)'s iPod have been the main drivers of Best Buy's (Charts) same-store sales, or sales at it stores open at least a year.

But excluding those two categories, the retailer's same-store sales have been slack over the same period. Therefore, both Wall Street analysts and investors have been worried that any slowdown in demand for those products could directly impact the company's profits and sales

In a conference call with analysts to discuss Best Buy's second-quarter results, executives allayed fears about cooling demand for flatpanel TVs. At the same time, they were more cautious about the outlook for MP3 sales.

"There's no decline seen in supply of [flatpanel] TVs and this should bring prices down," said Michael Vitelli, the company's senior vice president of merchandising.

The call was monitored via Web cast in New York.

He estimated that flatscreen TV prices this year would decline as much as 25 to 30 percent year-over-year, helping to "drive tremendous demand" in the second-half of the year which accounts for 60 percent of the company's total annual revenue.

Further, the retailer is doing its part to spur demand. Best Buy recently launched its "We Pledge" discount plan for purchases of high-definition TV that are 37-inch or bigger. The company said it will take as much as $400 off the sale price if consumes opt to hire Best Buy's service team to install the TV for them.

Investors appeared to cheer the news, boosting the No. 1 consumer electronic retailer's stock by more than 5 percent in afternoon trading after an initial decline.

However, Best Buy said industry sales of another popular category - MP3 players - in the second-quarter were flat to down although sales of the products at its stores saw single-digit increases during the period.

Best Buy's chief operating officer Brian Dunn said during the call that he was hoping Apple's new iPod and iTunes enhancements would help lift the category's sales.

Apple on Tuesday unveiled its new movie download service that would enable consumers to download movies made by Walt Disney Co. studios - Disney, Pixar and Touchstone - from the company's popular iTunes store, according to Reuters.

Apple also said it would update to its iPod line, rolling out a new 30-gigabyte version priced at $249, a new 80 gigabyte iPod which would retail for $349.

Best Buy reported second-quarter profits and sales that topped Wall Street's estimates.

The company logged a profit of 47 cents a share for the quarter, up from 37 cents a year ago, and three cents better than analysts' expectations.

Best Buy (up $3.74 to $51.51, Charts) stock initially dipped about 1 percent despite the strong results as investors fretted about the company's failed to raise its full-year profit guidance on the back of its strong performance.

Shares rebounded after the company gave a bullish outlook during its conference call with analysts for flat-screen TV sales going into the second-half and crucial holiday shopping months of November and December.

Best Buy's sales jumped 13 percent to $7.6 billion in the quarter, from $6.7 billion a year ago. Analysts had expected revenue of $7.5 billion, according to First Call.

The company's sales at stores open at least a year - a key retail measure known as same-store sales - rose 3.7 percent for the quarter.

Best Buy said sales were fueled partly by recent acquisitions and new store openings during the past 12 months, while sales of higher-ticket items such as flat-screen televisions and its services business buoyed profits.

The company reiterated its full-year profit guidance of $2.65 to $2.80 a share. Analysts, on average, expect the company to log $2.80 a share for the full year.

Tim Allen, an analyst with Jefferies & Co., said he was a little disappointed that the company did not raise its full-year guidance. "This indicates that management is cautious about the third quarter," Allen said.

Allen said he was concerned about TV and MP3 sales. "If either one of those categories decelerates, it will really hurt comparable sales going forward," he said.

Best Buy said flat-panel televisions experienced triple-digit comp-store sales gain.

However, sales for consumer electronics category slowed from the first quarter, increasing 8.9 percent versus a 12.1 percent gain the prior quarter.

Best Buy's shares are up 10 percent year to date, while shares of competitors Circuit City (Charts) are up 4.4 percent so far this year and down 11.7 percent for Radio Shack (Charts).

Can Best Buy get geekier?