AutoZone Inc. (AZO) saw its stock price plummet 8.70% during intraday trading on Tuesday, despite the auto parts retailer reporting fiscal third-quarter earnings that surpassed analyst expectations.

The decline was driven by investor concerns over profitability margins and weaker-than-anticipated international performance. While AutoZone posted earnings per share of $38.07, beating the Wall Street consensus estimate of approximately $36.22, its gross margin slipped to 52.2% due to a non-cash inventory charge. Higher costs and ongoing inventory investments continued to pressure margins, signaling that top-line sales growth is not translating into proportionate profit expansion.

Furthermore, the company's international business showed muted growth, with same-store sales increasing only 1.6% on a constant-currency basis, highlighting challenges in its Mexico and Brazil markets. This combination of margin compression and disappointing international results led investors to sell the stock following the earnings release, overshadowing the headline earnings beat.