Carat also defeated MediaCom, Universal McCann and Walker Media in the pitch, which was overseen by the brand communications director, Katie Spriggs, and assisted by Billetts.
WH Smith announced that it was reviewing its media and creative accounts out of Starcom Motive and Abbott Mead Vickers BBDO in January.
It followed a consistently poor trading performance by the company. With increased competition from supermarkets, WH Smith was forced to issue three profit warnings in the past year.
In a bid to revive its fortunes, the former Argos managing director Kate Swann was drafted in as the chief executive to replace Richard Handover, who became the chairman.
They both received a rocky ride at the company's annual general meeting earlier this year on account of Swann's remuneration package and because the appointment of Handover as the company chairman defied corporate best practice.
However, shares in WH Smith rose earlier this week (Tuesday 13 April) on news that the company would soon consider selling its Asia-Pacific operations to focus on turning around its UK business.
A decision on the creative review is expected by the end of the month.
Delaney Lund Knox Warren & Partners and DDB London are in a head-to-head battle for the account. J. Walter Thompson, Clemmow Hornby Inge, Euro RSCG London and WCRS were knocked off the list in earlier rounds.
AMV opted not to repitch.
Stephen Robertson, the interim marketing director at WH Smith, said: "Our first priority will be to work with Carat to build an efficient media plan that optimises quality and cost of our media buying for the remainder of 2004 and into our all-important Christmas season. We would like to thank Starcom Motive for its committed efforts on the account over the past ten years."
Carat's WH Smith win follows the decision of the Danone cracker brand Jacob's to shift its planning account out of Starcom Motive and into the agency.
Colin Mills, the managing director of Carat UK, said: "We have had a very good start to the year and I'm very pleased. Our investment in direct and communications planning has helped us with this."