The announcement follows two weeks of discussions that centred on fee negotiations and assurances BBH could successfully handle such a demanding, high-output retail account.
The news is a massive blow to Bates, which is reeling from the loss of the £20 million Royal Mail account after failing to make the agency shortlist to repitch for the business.
The two clients are estimated to account for almost a quarter of Bates UK's income. Toby Hoare, the chairman of the agency, last week confirmed that redundancies would be inevitable.
The review of the creative account was called in January - Bates pitched against BBH, TBWA/London and WCRS, which were shortlisted from a longlist of seven.
Following the final pitch, Octavia Morley, Woolworths' marketing director, confirmed both BBH and Bates UK had been called in for further talks but insisted no agencies had been ruled out.
Meanwhile, Bates is also coming to grips with the expected loss of its £6 million Wella haircare business in the UK in the next few months, after the company was bought by Procter & Gamble.
Chris Herd, Bates UK's managing director, said it would make a decision about job losses as quickly as possible but dismissed speculation about major job cuts. "We slimmed down last year and the agency now runs at a good operating profit," he said.
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