A deadly attack in the French city of Nice on Thursday night when a truck ploughed into crowds celebrating Bastille Day killing more than 80 people added to the pressure on luxury goods and travel companies.
"France looks difficult and is likely to stay difficult," Swatch Group CEO Nick Hayek told Reuters in a telephone interview.
"It is an important market. That is where tourists start their tours to most European countries."
Paris, hit by deadly Islamist attacks last November, is an important shopping destination for tourists, many from China, and the Swatch profit warning marked the start of what is likely to be a downbeat earnings season for the luxury industry.
"Nice is going to further hurt the sector. Tourists just won't want to come to Europe and particularly France during the summer," Kepler Cheuvreux analyst Jon Cox said.
Shares in Swatch, whose brands also include Omega and Longines, slid 11.6 percent to 256 Swiss francs by 0844 GMT, on top of a 17 percent fall so far this year and a 21 percent drop last year. Peer Richemont <CFR.S> also fell 3.9 percent.