Shares of the electronics retailer were climbing $1.33, or 6.4%, to $21.93 on the news.

The Richmond, Va.-based company said it will close seven stores in the U.S., a distribution plant in Louisville, Ken., and 62 underperforming stores in Canada.

"Because of the intensified gross margin pressures that we saw in the third quarter within the flat panel television category, we launched efforts to accelerate the timing of planned initiatives to improve sales and gross margin, as well as improve the efficiency of our expense structure," said Philip Schoonover, chairman, president and CEO, in a statement.

Circuit City said the plan will cost roughly $85 million to $105 million, with most of the expenses being incurred in the fourth quarter, ending this month.

"This is really good news," says Richard Hastings, senior retail sector analyst with Smyth-Bernard Sands. "It's very responsible and a really positive indication for future earnings. When you have severe product deflation, it doesn't take long before you have too many stores. You can only cut inventory so much. They don't have any appliances so there's no place else to turn."

Flat-screen TVs have become a huge driver of sales for Circuit City and its larger rival, Best Buy (BBY - commentary - Cramer's Take), but price competition from discounters such as Wal-Mart (WMT - commentary - Cramer's Take) have forced them to sell the TVs for less than planned. In December, both Circuit City and Best Buy reported weaker-than-expected fiscal third-quarter results, citing the margin pressure.