Three well-dressed armed bandits burst into a luxury Manhattan jewelry store on Tuesday afternoon before fleeing on foot with bags of expensive watches.

One suspect was under arrest, said Steve Davis, the New York Police Department's chief spokesman. Two men were still being sought.

The brazen heist occurred in broad daylight at the Tourneau store on Madison Avenue in a bustling section of midtown.

Witnesses said the three men, all dressed in suits, burst in and fired a warning shot into the floor. The suspects then smashed open a display case with a hammer and scooped watches into duffel bags.

As the men fled, a second shot was fired toward the back of the store. None of the four employees and one customer inside was injured, Davis said.

After a 911 call, plainclothes police officers spotted the men around West 57th Street and gave chase. They captured one of them and recovered one of the bags.

Investigators were studying security videotape from inside the store and on the surrounding streets to speed their search for the remaining suspects.

A woman answering the phone Tuesday at Tourneau's corporate offices said it had no comment.