Despite the high expenses associated with operating elegant stores and purchasing advertising space in upscale magazines, the premium retail prices that luxury goods command translate into handsome profits. The Louis Vuitton brand alone accounts for about 60 percent of LVMH's operating profit. However, unscrupulous operators have taken note of the high margins associated with Louis Vuitton SA, recently explained, "almost every month, we get a government somewhere in the world to destroy canvas, or finished products."
Another problem is a flourishing gray market. Givenchy and chistian dior's dune fragrance are just two of the luxury perfume brands that are sometimes diverted from authorized channels for sale at mass-market retail outlets. However, LVHM and other luxury goods marketers found a new way to combat gray market imports into the United States. In march 1995, the U.S. supreme court let stand an appeals court ruling prohibiting a discount drugstore chain from selling Givenchy perfume without permission. Parfums Givenchy USA had claimed that its distinctive packaging should be protected under U.S. copyright law. The ruling has meant that Costco, Walmart, and other discounter cannot sell some imported fragrances without authorization.