MILAN (Reuters) – Italian fashion house Versace is cutting about a quarter of its global workforce and expects to post a loss this year as it takes a hit from slumping demand for luxury goods and designer items in the financial crisis.

The celebrity-favorite fashion brand, whose gowns are worn by Hollywood actresses such as Angelina Jolie, is taking measures aimed at returning the group to profitability in 2011, it said in an emailed statement on Wednesday.

A source close to the company said Versace had a pretax loss of 400,000 euros ($593,400) last year and this would widen to 30 million this year.

Versace, which has a total workforce of 1,360, said it would cut about 350 jobs worldwide in a reorganization plan which will see it rationalize production facilities, review its store network, reduce capital investment next year and cut overheads.

All measures will be implemented by the middle of next year.

"Trading conditions in the wake of the global financial crisis have been severe and the company expects to make a loss in 2009," Chief Executive Gian Giacomo Ferraris said in the statement.

"No organization can allow a situation like this to continue, especially considering the flat outlook for 2010."

Versace is not the only fashion brand to feel the pinch of the crisis. France's Christian Lacroix filed for creditor protection in May, while Germany's Escada filed for insolvency in August.

In Italy, the owner of the Gianfranco Ferre brand, IT Holding is in the hands of government-appointed commissioners.

Ferraris was named Versace CEO in June after his predecessor resigned. Earlier this month the company said it was to rebuild its Japanese operations from scratch and was reassessing its entire company strategy.

Versace, known for its Medusa head logo, is owned by design head Donatella Versace, her brother Santo and her daughter Allegra.

Donatella took over the design of the fashion collections and in recent years has moved away from the house's trademark glitz and gold to more wearable outfits.