Creating material variant produces errors if there is no Materials folder

Steps to reproduce:
1. Open attached project "URPSprite.zip" and scene "SampleScene"
2. In Hierarchy window, select SampleCharacter GameObject
3. In Inspector window, Lit (Material) Component, press the hamburger (three dot) menu -> Create Variant for Renderer
4. Observe Console window

Expected result: No errors
Actual result: "Can't create asset because path is empty." "UnityException: Creating asset at path  failed." errors

Reproducible with: 2022.3.9f1, 2023.1.15f1, 2023.2.0b11, 2023.3.0a7
Could not test with: 2021.3.30f1 (material variant creation not available)

Reproduced on: Windows 10