Despite higher freight and logistics costs, Nike’s gross margins increased slightly. Profitability was helped by higher full-priced sales and healthy growth in the direct-to-consumer business, which yields higher margins than selling wholesale. Its shares, which had been off by more than a fifth year-to-date as investors fretted about slowing sales in China, inflation and supply-chain issues, jumped nearly 6% in after-hours trading.

Investors had many reasons to feel reassured. For example, Chief Financial Officer

Matthew Friend

said all its factories in Vietnam are now operational and are producing volumes in line with pre-pandemic levels. Some bottlenecks still remain, however: Transit times in North America actually worsened in the third quarter and are now more than six weeks longer than pre-pandemic levels. Nike plans to move forward its buying schedule to account for those delays.

Another positive development was improving sales in Greater China, Nike’s most profitable market, which had been hit by a social-media backlash starting last year. Nike was among Western apparel brands that released statements expressing concern about reports of forced labor in Xinjiang. Revenue in the region declined 8% excluding currency impacts—better than the 12% drop analysts had been expecting on the same basis. In the preceding quarter, sales in that region had declined 24%.

There are still possible curveballs ahead. Nike said it expects year-over-year sales to improve in the Greater China region compared with last quarter, but that is far from certain given new Covid-19-related lockdowns. Although Nike said that business in Russia and Ukraine combined represents less than 1% of total revenue, the conflict still could hit consumers by fueling inflation in other goods, making them less likely to spend on its products.

However much such factors weigh on Nike, it is better equipped—through scale and an $8.7 billion cash cushion—to weather them compared with peers. Indeed, it has a record of gaining share during sector disruptions. Aneesha Sherman, equity analyst at Bernstein, wrote in a recent report that strong brands such as Nike emerged with greater market share coming out of previous crises, including the 2000 dot-com crisis, the 2008-09 recession and the 2020 Covid-19 pandemic. Nike increased its market share in apparel and footwear in the U.S. by 1.2 percentage points between 2019 and 2021, according to data from Euromonitor analyzed by Bernstein. That compares favorably to 0.3 point gains seen by

Under Armour

and

Lululemon

and no gains by Adidas over the same time frame.

Nike—whether its shoes or its shares—rarely lands in the bargain bin, but the stock now fetches about 29 times forward-12-month earnings, a modest discount compared with its five-year average of 31 times. Put another way, its shares trade at a 51% premium to the S&P 500 on that basis, while over the past five years it has commanded a 62% premium on average. Investors should snatch a good deal when they see one.

Write to Jinjoo Lee at jinjoo.lee@wsj.com